Shoes are essential items so footwear retailers that can offer good value for money in a cost-of-living crisis stand to benefit the most.
That’s exactly what we are seeing with Shoe Zone which is enjoying rising sales and profit. Life is going so well that the company has restarted dividends and will also make an extra one-off payment to shareholders.
AJ Bell investment director Russ Mould said: “Shoe Zone has become one of the go-to places for individuals looking to being kitted out with new footwear for work and parents wanting affordable school shoes for their children.
“Interestingly, while demand is particularly strong, the company continues to close its weaker stores and right-size its estate. And when a lease is renewed, it is getting better deals. An average lease length of 1.8 years means it isn’t lumbered with stores if they aren’t generating the expected business, thus providing flexibility which many other retailers can only dream of.
“The outlook for Shoe Zone looks promising given widespread expectations of the country being in a recession during 2023. However, longer-term there is a chance that a stronger economy encourages people to be less cost-conscious when making retail decisions and more premium-priced retailers become in vogue for essential footwear.
“That’s always going to be a risk for Shoe Zone, but it will have seen this trend plenty of times before. If it can continue to streamline the business and get it running as efficiently as possible then it would be in good health at the point when competition increases once again.”