Value-for-money footwear retailer Shoe Zone (SHOE:AIM) warned it is ‘extremely unlikely’ to return to profit until 2022 at the earliest as full-year results showed a pandemic-induced lurch into loss.
The one-time small cap income favourite also confirmed it won’t be in a position to make dividend payments until at least 2025, news that sent the shares 3.8% lower to 72p on Monday.
COVID IMPACT CONFIRMED
‘We do not expect profits will return to pre COVID-19 levels for the foreseeable future,’ cautioned Shoe Zone in today’s poorly received results statement.
‘Lockdown in November and January to mid-April so far in this financial year makes a return to profit extremely unlikely until the financial period ending on 2 October 2022 at the earliest’, warned the company.
Covid-19 and the related Government restrictions have had a major impact on trading at ‘non-essential’ retailer Shoe Zone.
Underlying pre-tax losses for the year ended 3 October 2020 amounted to £14.6 million, versus a prior year pre-tax profit of £6.7 million, after a £2.3 million freehold property valuation write-down.
Sales slumped 24.3% to £122.6 million although within the mix, digital revenue surged 82% higher to £19.3 million as shoppers snapped up its cut-price shoes during lockdown periods.
Given that all of its stores are currently closed, Shoe Zone remains ‘unable to forecast accurately due to current uncertainties’, though customers will be returning to its stores on or after 12 April 2021 in England and embattled Shoe Zone insists its digital platforms continue to perform well.
DIVIDEND DISAPPOINTMENT
Having cancelled the dividend for 2020, Shoe Zone also confirmed that a return to the dividend list is unlikely until at least 2025, as it needs to prioritise supporting the £10.6 million deficit on its pension schemes, repairing the balance sheet and restoring its capital expenditure programme.
‘In my second year back as Chief Executive,’ said Anthony Smith, ‘it is disappointing I am reporting on a year impacted by COVID-19. Despite this, there are positives such as the continued growth of digital and the commitment and focus of our loyal employees. The financial pressure caused by COVID-19 has meant we now have debt on the balance sheet for the first time in over 15 years.’
In other news, Shoe Zone announced the appointment of the aptly-named Terry Boot as finance director following the recent departure of, wait for it, Peter Foot, who had only spent seven months in the role.
