High street chain warns profits will fall further amid weak consumer confidence
Shoe Zone says trading conditions remain ‘challenging’(Image: )
Shoe Zone has criticised “highly adverse” government policies as it reported a significant drop in annual profits and warned that earnings are expected to fall further due to challenging trading conditions.
The high street retailer’s shares fell by 22% in Tuesday morning trading after it announced that pre-tax profits had plummeted by over two-thirds to £3.3 million in the year to September 27, down from £10.1 million the previous year.
The Leicester-based company stated that trading continues to be strained at the start of 2025-26 due to weak consumer confidence, attributing soaring costs and reduced shopper spending to Government budget measures.
The group is predicting that profits will decrease to approximately £1 million in the year to October – a 70% year-on-year decline.
Chairman Charles Smith said: “Trading conditions remained challenging in the first quarter of the new financial year, with revenue down on forecast, reflecting ongoing macro-economic pressures that continue to weigh on consumer confidence resulting in lower footfall on the UK high street, alongside the highly adverse Government fiscal policies.
“The Government’s November 2025 budget included an additional increase in the national living wage, raising our cost base further, with broader measures not materially improving consumer sentiment.”
In recent months, the group’s shares have dropped to their lowest level in five years as its trading difficulties have intensified.
The retailer witnessed a 10.3% decline in store sales to £113.1 million throughout 2024-25, closing the financial year with a net reduction of 28 outlets, bringing the total to 269.
Whilst 39 shops were shuttered, the business opened 11 new locations and converted six stores to its expanded format.
Mr Smith pointed to Government policy as a burden on the prior year’s performance, whilst acknowledging additional pressures on trading conditions.
He commented: “Persistent inflation, higher interest rates and reduced disposable income contributed to negative economic and consumer sentiment in the UK.
“Sales were good when there was a reason to buy, such as the warm summer and the back-to-school period, however discretionary spending remained subdued as consumers exercised greater caution in what they were spending money on.”
