Shoezone shuts UK stores and blames Budget tax and wage rises
Shoezone has shut a number of stores in response to rising wages and taxes announced in the Budget.
The discount shoe retailer – which employs around 2,250 staff across 297 stores in the UK – said the Chancellor's move to increase employers' National Insurance Contributions (NICs) and increase the minimum wage has led to "significant additional costs".
The high street chain said: "These additional costs have resulted in the planned closure of a number of stores that have now become unviable. The combination of the above will have a significant impact on our full year figures."
However, it did not officially confirm how many stores it had shut down or the number of workers affected by the closures. The group has already been closing loss-making stores over the past year, revealing in October that 26 sites had been shut on a net basis. Overall, 53 sites had closed, and less than 27 opened – in the year leading to September 2024.
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In the update to investors this morning the company said it expects its profit before tax for the financial year ending September 2025 to be around £5million, down from previous expectations of £10million. The profit warning is the second in the last few months after it also lowered guidance in October for the year to September 2024, blaming poor summer weather for lower sales.
The retailer also said it would not be paying a dividend to shareholders for the financial year ending this September – a dividend is money paid to shareholders who hold stock in a company based on its success.
Shoe Zone also said it had seen "very challenging trading conditions" since the end of September as shoppers pulled back spending amid unseasonal weather, adding that consumer confidence had weakened further since the October budget.
Shares plunged by as much as 49% on Wednesday morning as it cautioned that due to the tough trading and extra wage bill, annual profits would be lower than expected. Shoe Zone said annual sales fell 2.7%, which it expected will leave 2023-24 profits at "not less than" £9.6million against the £16.2million reported the previous year. The Mirror has approached Shoezone for comment.
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