Shoe Zone has warned it is set to post an annual loss, due to weakening consumer confidence and rising costs linked to the Iran conflict and recent UK budget measures.
The high-street retailer, which operates 259 stores and employs more than 2,000 staff, said it now expects an underlying pre-tax loss of between £1 million and £2 million for the year to October 3, reversing earlier forecasts of a profit of around £1 million.
Shares in the group plunged by 22% in early trading on Wednesday as investors reacted to the downgrade.
Shoe Zone said trading conditions had deteriorated significantly in recent months, citing a “continued weakening in consumer confidence” after recent government budgets and broader geopolitical instability in the Middle East.
It said the conflict had pushed up shipping and transport costs, adding further pressure to margins already strained by subdued demand.
“These macroeconomic factors have increased customer caution, leading to lower footfall, less discretionary spend and additional costs such as container prices and transportation costs,” the company said, adding that this had resulted in reduced revenue and profitability.
The warning comes after similar comments from other retailers, with budget clothing chain Primark also reporting softer trading in April amid weaker consumer sentiment.
Shoe Zone has previously criticised what it described as “highly adverse” government policies, arguing they have hit both consumer confidence and business costs.
The company reported a sharp fall in profits last year, with earnings more than two-thirds lower at £3.3 million and store sales down 10.3%, as it closed a net 28 shops.
The latest update adds to growing concern across the retail sector that fragile consumer demand and rising global costs are creating a difficult trading environment, particularly for value-focused high street chains.
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