Budget footwear seller Shoe Zone's (SHOE:AIM) stellar run is arrested today, the shares slumping 29% to 183.5p on a profit warning. The Leicester-based retailer blames warm weather for a first half and full-year profits shortfall that will also shrink the size of the annual shareholder reward.

In an update covering the half ended 4 April, the UK's biggest value footwear retailer blames the impact of balmy weather on autumn/winter trading for slower-than-anticipated sales. In actual fact, footwear volumes were ahead, but the average price was lower as weather, so often bemoaned by quoted retailers, altered the product mix. As an example, Shoe Zone says that 'lower priced ladies ankle boots were favoured over long leg boots'.

Web chart - SHOE - April 15

Interim and full-year sales and profits will miss market expectations and Shoe Zone, whose cash generation forms a key part of the investment case, also warns the dividend will be 'adjusted accordingly'. Numis Securities this morning downgrades its year to September pre-tax profit forecast by 23% to £10 million and its dividend estimate from 12.3p to 9.5p.

Yet investors shouldn't be overly gloomy following this misstep. Shoe Zone's margins have remained strong and stock has been well managed, which should avert the need for discounting, while the Aim counter insists its net cash position remains strong.

Significantly, Shoe Zone, guided by brothers Anthony Smith (pictured below), chief executive officer and Charles Smith, chief operating officer, is stepping ahead with its successful store portfolio strategy, outlined in detail here. It continues to open larger format stores, which are more profitable, while carrying out shop refits and driving down rents across the property portfolio.

Anthony Smith2 May14

Growth through the group's online channel, where shoezone.com is growing at pace and management is excited by launches on Amazon (AMZN:NDQ) and eBay (EBAY:NDQ), is 'comfortably ahead of schedule.' You can read our Griller interview with Anthony Smith, dubbed the 'slipper king' by friends, from September here.

Issue Date: 21 Apr 2015