TIDMSHOE
RNS Number : 4765Z
Shoe Zone PLC
16 May 2023
Shoe Zone PLC
("Shoe Zone" or the "Company")
Interim results for the 26 weeks to 1 April 2023
Shoe Zone PLC is pleased to announce its interim results for the
26 weeks to 1 April 2023, (the "Period").
Financial highlights
-- Revenue of GBP75.4m (2022 H1: GBP69.9m) +7.9%
o Store revenue GBP61.1m (2022 H1: GBP57.2m) +6.8%
o Digital revenue GBP14.3m (2022 H1: GBP12.7m) +12.7%
-- Contribution of GBP11.1m (2022 H1: GBP11.6m)
o Store contribution of GBP7.9m
o Digital contribution of GBP3.2m
-- Profit before tax of GBP1.5m (2022 H1: GBP3.1m)
-- Adjusted profit before tax of GBP2.5m (2022 H1: GBP3.1m)*
-- Earnings per share of 3.1p (2022 H1: 5.7p )
-- Net cash of GBP12.9m (2022 H1: GBP13.9m) at Period end
-- Proposed interim dividend of 2.5 pence per share (2022 H1: 2.5 pence)
Operational highlights
-- 336 stores at Period end (2022 FY: 360) comprising:
o 44 Big Box (2022 FY: 45)
o 66 Hybrid (2022 FY: 44)
o 226 Original (2022 FY: 271)
-- 17 stores opened, 6 refits, 41 closed
-- Capital expenditure of GBP5.3m (2022 H1: GBP2.3m)
-- Annualised lease renewal savings of GBP0.4m, an average reduction of 27%
-- Average lease length of 2.1 years (2022 FY: 1.8 years)
-- Digital returns rate of 11.9% (2022 H1: 11.8%) - 12 months average
* Adjusted items 2023 H1 GBP1.3m forex loss offset by GBP0.3m
profit on sale of freehold. (2022 H1: Forex loss GBP0.3m, property
gain GBP0.3m)
For further information please call:
Shoe Zone PLC Tel: +44 (0) 116 222 3001
Anthony Smith (Chief Executive)
Terry Boot (Finance Director)
Zeus (Nominated Adviser and Broker) Tel: +44 (0) 203 829
5000
David Foreman, James Hornigold, Ed Beddows (Investment
Banking)
Dominic King (Corporate Broking)
Chief Executive's statement
Introduction
Shoe Zone delivered a robust and positive performance in the
Period against a backdrop of consumer uncertainty and macroeconomic
volatility. Total revenues increased by 7.9% having traded out of
52 fewer stores compared to 12 months ago and digital revenue
within this increased by 12.7%. The performance further
demonstrates the resilience of our business and the success of our
ongoing strategy.
Trading over all channels was positive with total revenues of
GBP75.4m (2022 H1: GBP69.9m), store revenues were GBP61.1m (2022
H1: GBP57.2m), Digital revenues were GBP14.3m (2022 H1: GBP12.7m)
with strong performance across all online channels with additional
growth from our online exclusive range and range extensions.
Adjusted profit before tax was GBP2.5m (2022 H1: GBP3.1m), which
is slightly above management expectations for the Period. The
reduction on the comparable period last year is due to inflationary
cost increases, mainly National Living Wage increases.
We ended the Period trading out of 336 stores, which is a
reduction of 52 compared to 12 months ago and 24 from last year
end. In the first half we closed 39 'Original' stores, opened 16
Hybrids, refitted 6 'Original' stores to our Hybrid format, closed
2 Big Box stores and opened 1 new Big Box. In total we are now
trading out of 226 'Original' stores, 66 Hybrids and 44 Big Box. We
are actively working to relocate and refit further stores in the
second half of the year, together with a number of stores currently
in the pipeline, opening before Christmas.
Our average lease length is 2.1 years (2022 FY: 1.8 years),
giving us the opportunity and flexibility to respond to changes in
any retail location at short notice. Property supply continues to
outstrip demand and we continue to take advantage of this and
significantly improve our property portfolio over the medium
term.
Strategy Update
We have accelerated our refit and relocation programme along
with further investment in our digital and head office
infrastructure. All of these are key to our strategy, and we expect
to spend approx. 3-4% of revenue annually on capital projects.
We have continued to invest in our portfolio with more
'Original' Shoe Zone stores converted to Hybrid formats. The
results continue to be very positive, and we continue to look for
further opportunities to roll these formats out as planned. Our
ultimate goal is a doubling of Big Box locations to approximately
100 and an increase in Hybrid stores to 200 in the medium term. We
anticipate trading from a similar retail square footage, albeit
from a reduced number of locations. Digital revenues grew by 12.7%
as we continue to invest in new product lines and additional brands
as well as enhancing our platform with the introduction of a new
return's portal, the development of a mobile App and adding new
payment options, all of which will improve customer experience.
Part of the success of our digital operation is our very
efficient returns process which is complemented by our extensive
network of stores. We have a returns rate of 11.9%% and the vast
majority of these are returned to store, hence why our physical
store network is critical to our future success.
Dividend
The Board proposes an interim dividend of 2.5p per share, which
will become payable on 16 August 2023 to those shareholders on the
Company's register as at the close of business on the record date
14 July 2023. The ex-dividend date will be 13 July 2023.
Financial Review
Profit before tax was GBP1.5m, adjusted to GBP2.5m (2022 H1:
GBP3.1m (reported and adjusted)). The adjustments include foreign
exchanges losses and profit on one freehold property sale. The
GBP0.6m reduction year on year reflects inflationary increases,
mainly National Living Wage, and a lower margin achieved percentage
due to higher container prices and a weak sterling to dollar.
In the Period total revenues were GBP75.4m (2022 H1: GBP69.9m).
Store revenues increased by GBP3.9m even though we ended the Period
trading out of 52 fewer stores than 12 months ago. Digital sales
increased by GBP1.6m to GBP14.3m (2022 H1: GBP12.7m). Digital gross
margins reduced to 58.0% (2022 H1: 58.5%) due to higher container
prices and contribution was GBP3.2m (2022 H1: GBP2.7m).
One freehold property went to auction, resulting in a profit on
sale of GBP0.3m. A further property will be auctioned in the second
half which will conclude our freehold sales.
Gross profit in the Period was GBP13.6m, the same as the
comparable period last year (2022 H1: GBP13.6m), with gross profit
margin at 18.1% (2022 H1: 19.5%). The percentage reduction was due
to the underlying product margin being lower this Period (2023 H1:
60.1%, 2022 H1: 60.8%), due to the impact of higher container
prices, particularly in Q1 and a weak sterling to dollar exchange
rate. Subsequent to this, container prices have dropped to below
pre pandemic levels, the benefit of which will start to flow
through in the second half of this year. Depreciation charge
increased due to higher capital spend.
Administration expenses increased by GBP1.6m to GBP9.1m (2022
H1: GBP7.5m) due to GBP1.0m additional foreign exchange losses this
year, a higher head office depreciation charge and an additional
cost of living bonus paid to all staff in February.
Distribution costs increased by GBP0.2m to GBP2.6m (2022 H1:
GBP2.4m) due to the impact of the National Living Wage increase and
inflationary cost increases on transport expenses.
Our energy prices are fixed until September 2023. All our
electricity consumption is from 100% renewable sources, we have
started to monitor energy consumption and have a programme to
insulate ceilings and to install more energy efficient lighting in
a number of stores. During the Period, we have added electric and
more hybrid vehicles to our fleet and have changed all of our
warehouse lighting to more energy efficient LED.
Stock at the Period end was GBP3.0m lower at GBP28.1m (2022 H1:
GBP31.1m). This reflects our positive trading over the last 12
months, a more normalised intake pattern and the selling through of
prior seasons boot product that we previously reported as an over
stock.
The Company ended the Period with a net cash balance of GBP12.9m
(2022 H1: GBP13.9m). The reduction is due to GBP8.2m of dividends
paid in the last 12 months, GBP2.9m of shares bought back and
additional capital spend, offset by the positive trade in the
Period and lower stock levels.
The share buy-back programme continues and as at the Period end,
we had re-purchased 1.8m shares at a total cost of GBP3.5m (average
priced paid of GBP1.93). We have cancelled 1.5m shares with 0.3m
held in treasury to date. (with 1.0m shares cancelled in the
Period).
Capital expenditure in the Period was GBP5.3m (2022 H1: GBP2.3m)
which is returning to our long-term target of approx. 3-4% of
revenue. Expenditure in the Period included new stores, refits and
relocations, which are partly funded by Landlord rent free periods,
IT expenditure and infrastructure works in head office and
distribution centre, which will be continued through the second
half of the year.
The Shoefayre Limited Pension and Life Assurance Scheme moved
into a deficit of GBP2.0m (2022 FY: GBP1.8m surplus). This was due
to a fall in bond yields which led to a lower assumed discount rate
and therefore a higher value being placed on the scheme's
liabilities. The Shoe Zone Pension Schemes' surplus reduced to
GBP1.3m (2022 FY: GBP7.1m surplus) The main reason for this was due
to the purchase of the buy-in contract with Rothesay. Specifically,
the value of the scheme's uninsured liabilities as at 2 March 2023
was lower than the actual premium paid to secure members' benefits
with Rothesay.
Earnings per share were 3.1p (2022 H1: 5.7p per share).
Full year results in line with market expectations.
Unaudited consolidated income statement ( 52 weeks audited )
26 Wks 26 Wks 52 Wks
end end end
1 Apr 2 Apr 1 Oct
2023 2022 2022
GBP'000 GBP'000 GBP'000
Revenue 75,391 69,864 156,164
Cost of sales (61,752) (56,247) (119,764)
---------- ---------- -----------
Gross Profit 13,639 13,617 36,400
Administration
expenses (9,100) (7,508) (16,620)
Distribution costs (2,668) (2,448) (5,104)
---------- ---------- -----------
Profit from Operations 1,871 3,661 14,676
Finance income 0 0 0
Finance expense (342) (599) (1,113)
---------- ---------- -----------
Profit before
Tax 1,529 3,062 13,563
Taxation 0 (197) (2,718)
Profit after Tax 1,529 2,865 10,845
========== ========== ===========
Earnings per Share 3.1p 5.7p 21.7p
Unaudited consolidated statement of total comprehensive income (
52 weeks audited)
26 Wks 26 Wks 52 Wks
end end end
1 Apr 2 Apr 1 Oct
2023 2022 2022
GBP'000 GBP'000 GBP'000
Profit/(Loss)
for the period 1,528 2,865 10,845
--------- --------- ---------
Items that will not be reclassified
subsequently to the
income statement
DB pension scheme (1,973) 3,110 5,798
Movement in deferred tax on
pension schemes (57) (560) (1,505)
Share buy back (1,849) 0 (966)
Cash flow hedges
Fair value movements in other comprehensive
income (776) 682 1,129
Tax on cash flow
hedges 0 (109) (226)
--------- --------- ---------
Other comprehensive (expense)/Income
for the period (4,655) 3,123 4,230
Total comprehensive (expense)/Income
for the period (3,127) 5,988 15,075
========= ========= =========
attributable to equity holders
of the parent
Unaudited consolidated statement of financial position (52 weeks
audited )
26 Wks 26 Wks 52 Wks
end end end
1 Apr 2 Apr 1 Oct
2023 2022 2022
Assets GBP'000 GBP'000 GBP'000
Non-current
Assets
Property, plant and
equipment 15,859 13,555 12,582
Right of use
assets 25,454 28,526 25.581
Deferred tax
asset 902 2,490 720
---------- ---------- ----------
Total Non-current
Assets 42,215 44,571 38,883
Current Assets
Inventories 28,117 31,096 32,188
Trade and other receivables 3,007 3,450 6,071
Derivative financial
assets 0 456 0
Cash and cash equivalents 12,870 13,872 24,427
---------- ---------- ----------
Total Current
Assets 43,994 48,874 62,686
Total Assets 86,029 93,445 101,569
Current Liabilities
Trade and other payables (17,281) (19,484) (22,801)
Lease liabilities (13,562) (14,016) (14,870)
Derivative financial
liabilities (603) 0 0
Provisions (2,575) (1,727) (1,108)
Corporation tax liability (289) (317) (1,910)
---------- ---------- ----------
Total Current Liabilities (34,310) (35,544) (40,689)
Non-current Liabilities
Lease liabilities (21,349) (23,554) (20,975)
Provisions (1,508) (2,084) (2,662)
Employee benefit liability (1,973) (2,857) 0
---------- ---------- ----------
Total Non-current
Liabilities (24,830) (28,495) (23,637)
Total Liabilities (59,140) (64,039) (64,326)
Net Assets 27,069 29,406 37,243
========== ========== ==========
Equity attributable to equity
holders of the company
Called up share capital 485 500 495
Merger res/Cap
red 2,677 2,662 2,667
Cash flow hedge reserve (123) 323 653
Retained earnings 24,030 25,921 33,428
---------- ---------- ----------
Total Equity and
Reserves 27,069 29,406 37,243
========== ========== ==========
Unaudited consolidated statement of changes
in Equity ( prior years audited)
Cash
Share Share Capital flow Retained Total
Capital Premium Redemp. Hedge Earnings
Reserve Reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At October 2021 500 2,662 0 (250) 20,506 23,418
--------- --------- --------- --------- ---------- ---------
Profit for the period 0 0 0 0 2,865 2,865
Defined benefit pension movements 0 0 0 0 3,110 3,110
cash flow hedge movements 0 0 0 682 0 682
Deferred tax on other comp.
income 0 0 0 (109) (560) (669)
--------- --------- --------- --------- ---------- ---------
Total comprehensive income
for the period 0 0 0 573 5,415 5,988
Dividends paid 0 0 0 0 0 0
--------- --------- --------- --------- ---------- ---------
Contributions by and distrib.
to owners 0 0 0 0 0 0
As at April 2022 500 2,662 0 323 25,921 29,406
--------- --------- --------- --------- ---------- ---------
At October 2021 500 2,662 0 (250) 20,506 23,418
--------- --------- --------- --------- ---------- ---------
Impact of transition to IFRS-16 0 0 0 0 10,845 10,845
Profit for the period 0 0 0 0 5,798 5,798
cash flow hedge movements 0 0 0 1,129 0 1,129
Share buy-back (5) 0 5 0 (966) (966)
Deferred tax on other comp.
income 0 0 0 (226) (1,505) (1,731)
--------- --------- --------- --------- ---------- ---------
Total comprehensive income
for the period (5) 0 5 903 14,172 15,075
Dividends paid 0 0 0 0 (1,250) (1,250)
--------- --------- --------- --------- ---------- ---------
Contributions by and distrib.
to owners 0 0 0 0 (1,250) (1,250)
As at October 2022 495 2,662 5 653 33,428 37,243
--------- --------- --------- --------- ---------- ---------
At October 2022 495 2,662 5 653 33,428 37,243
--------- --------- --------- --------- ---------- ---------
Profit for the period 0 0 0 0 1,528 1,528
Defined benefit pension movements 0 0 0 0 (1,973) (1,973)
cash flow hedge movements 0 0 0 (776) 0 (776)
Share buy-back (10) 0 10 0 (1,849) (1,849)
Deferred tax on other comp.
income 0 0 0 0 (57) (57)
--------- --------- --------- --------- ---------- ---------
Total comprehensive income
for the period (10) 0 10 (776) (2,351) (3,127)
Dividends paid 0 0 0 0 (7,047) (7,047)
--------- --------- --------- --------- ---------- ---------
Contributions by and distrib.
to owners 0 0 0 0 0 0
As at April 2023 485 2,662 15 (123) 24,030 27,069
--------- --------- --------- --------- ---------- ---------
Unaudited consolidated statement of cash flows ( 52 weeks
audited )
26 Wks 26 Wks 52 Wks
end end end
1 Apr 2 Apr 1 Oct
2023 2022 2022
GBP'000 GBP'000 GBP'000
Operating activities
Profit after tax 1,529 2,865 10,845
Corporation tax 0 197 2,718
Finance income 0 0 0
Finance expense 342 599 1,113
Depreciation of property, plant
and machinery 1,737 1,514 4,118
Fixed asset impairment and loss
on disposal of property, (111) 1,457 (1,075)
plant and machinery
Right of use asset on profit, depreciation
& impairment 6,977 7,217 13,016
Pension contributions paid 0 0 0
---------- ---------- ----------
10,474 13,849 30,735
Decrease/(increase) in trade and
other receivables 3,064 2,007 627
Decrease/(increase) in foreign
exchange contracts (412) (357) (527)
Decrease/(increase) in inventories 4,071 (5,965) (7,057)
(Decrease)/increase in trade and
other payables (5,520) 3,154 6,361
Increase in provisions 313 386 345
---------- ---------- ----------
1,516 (775) (251)
---------- ---------- ----------
Cash generated from operations 11,990 13,074 30,484
Net corporation tax paid (1,738) (653) (1,214)
---------- ---------- ----------
Net cash flows from operating
activities 10,252 12,421 29,270
---------- ---------- ----------
Investing activities
Purchase of property, plant and
machinery (5,314) (2,299) (5,225)
Proceeds from Sale of Freeholds 411 0 3,590
---------- ----------
Net cash used in investing activities (4,903) (2,299) (1,635)
---------- ---------- ----------
Share buy-back (1,849) 0 (966)
Repayment of CLBILS loan 0 (4,400) (4,400)
Capital element of lease repayments (8,196) (10,790) (15,584)
Interest 186 (75) (23)
Dividends paid during year (7,047) 0 (1,250)
---------- ----------
Net cash used in financing activities (16,906) (15,265) (22,223)
---------- ---------- ----------
Net inc/(dec) in cash and cash
equivalents (11,557) (5,143) 5,412
Cash and cash equivalents at beginning
of period 24,427 19,015 19,015
Cash and cash equivalents at end
of period 12,870 13,872 24,427
========== ========== ==========
Notes to the financial statements for the 26 weeks ended 1 April
2023
Basis for preparation
The consolidated interim financial statements of the company for
the 26 weeks ended 1 April 2023, which are unaudited, have been
prepared in accordance with the same accounting policies,
presentations and methods of computation followed in the condensed
set of financial statements as applied in the group's latest
audited financial statements. A copy of those accounts has been
delivered to the Registrar of Companies.
The financial information for the 26 weeks ended 1 April 2023,
contained in this interim report, does not constitute the full
statutory accounts for that period. The independent Auditors'
report on the Annual Report and Financial Statements for 2022 was
unqualified, did not draw attention to any matters by way of
emphasis. And did not contain a statement under 498(2) or 498(3) of
the Companies Act 2006.
The consolidated interim financial statements have neither been
audited nor reviewed pursuant to guidance issued by the Auditing
Practices Board.
The condensed consolidated interim financial statements have
been prepared on a going concern basis and under the historic cost
convention, as modified by the revaluation of derivative financial
instruments to far value.
The condensed consolidated interim financial statements are
presented in sterling and have been rounded to the nearest thousand
(GBP'000).
The preparation of financial information in conformity with IFRS
requires management to make estimates and assumptions that affect
the reported amount of assets and liabilities at the date of the
financial statements and the reported amount of revenues and
expenses during the reporting period. Although these estimates are
based on management's best knowledge of the amount, event or
actions, actual events ultimately may differ from those
estimates.
1. Accounting policies
In preparing these interim financial statements, the significant
judgements made by management in applying the group's accounting
policies and the key sources of estimation uncertainty were the
same as those applied to the consolidated financial statements
reported in the latest annual audited financial statements for the
52 weeks ended 1 Oct 2022.
Going Concern
At the balance sheet date the company had a good cash balance
and a strong net asset position. At the time of reviewing these
accounts, the Directors have considered the effect of COVID-19 on
the ongoing position, and consider that this does indicate that the
company will continue to trade for a period of at least 12 months
from the date of publishing these accounts. Based on the cash
forecasts prepared by the Directors, these financial statements
have been prepared on a going concern basis.
2. Segmental Information
The group complies with IFRS 8 'Operating Segments' which
determines and presents operating segments based on information
provided to the chief operating decision maker. The chief decision
maker has been identified as the management team including the
Chief Executive and Finance Director. The Board considers that each
store is an operating segment but there is only one reporting
segment as the stores qualify for aggregation, as defined under
IFRS 8.
26 Wks 26 Wks 52 Wks
end end end
1 Apr 2 Apr 1 Oct
2023 2022 2022
External revenue by location
of customers: GBP'000 GBP'000 GBP'000
United Kingdom 60,776 56,855 128,664
Digital 14,347 12,726 26,967
Other 268 283 533
75,391 69,864 156,164
========= ========= =========
3. Taxation
The taxation charge of zero for the 26 weeks ended 1 April 2023
is based on the assumption that the capital allowances available on
our estimated capital spend will reduce the expected charge for the
full year.
4. Earnings per share
26 Wks
end 26 Wks end 52 Wks end
1 Apr 2 Apr 1 Oct
2023 2022 2022
GBP'000 GBP'000 GBP'000
Profit in the period and earnings
used in basic
diluted earnings
per share 1,529 2,865 10,845
3.1p 5.7p 21.7p
========= ============ ============
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IR GPUWPAUPWGQA
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