Shares in Shoe Zone have fallen by more than 30% after the High Street chain announced that its boss Nick Davis had resigned and warned that its profits would be lower than expected.
Russ Mould from AJ Bell said: “Expectations were very low at the start of 2019 for the retail sector following a very difficult time for the industry last year. Much to many people’s surprise numerous companies have this year come out with fairly decent trading updates including JD Sports, Dunelm and Next, suggesting that retail was still alive and well.
“Among the companies proving to be fairly resilient was Shoe Zone, helped by having some levers to pull such as securing rent reductions and closing its weaker stores. It also helped that the company sold affordable but essential products.
“To now have a profit warning from the company would suggest the retail sector is still a brutal place in which to operate. The high street is to blame for Shoe Zone’s woes with the company’s underperformance understood to be across all regions, product types, prices and brands.
“A value retailer like Shoe Zone will have to rely on high volumes of sales to make money which is a problem when footfall is weak on the high street. With the economic outlook for the UK looking gloomy, life could get even harder for the company and so it will have to do everything it can to improve brand awareness, product marketing and keep a lid on costs.”