Shoe Zone, the beleaguered UK shoe retailer, blamed a new wave of store closures on cost pressures caused by budget measures in October.
The Leicester-headquartered chain, which currently employs around 2,250 staff across 297 stores, said new financial burdens – particularly higher National Insurance contributions and an increase in the minimum wage – had pushed some outlets beyond the point of viability.
In a statement highlighting “extremely difficult trading conditions”, the company highlighted strained consumer confidence following the Chancellor’s latest Budget, weaker-than-expected spending by shoppers, and poor weather affecting footfall. Combined, these factors have forced Shoe Zone to cut its profit forecast for the year to 27 September 2025 to “at least £5m” – almost half its previous target of £10m.
“This year’s Budget, announced by Rachel Reeves in October 2024, has intensified cost pressures and impacted consumer sentiment. As a result, some stores can no longer be maintained. The retailer has confirmed that it will not pay a final dividend for 2024.
Investors reacted sharply, sending shares down 38.5 per cent to 85p. This additional decline caps a challenging year, with the stock down by two-thirds over the past 12 months.
Shoe Zone, founded in 1980, is known for its budget-friendly shoes – the average price is around £13.30 per pair – and operates through a mix of high streets, retail parks and online sites. Although the company has been gradually closing loss-making stores to simplify its portfolio (26 net closures in the last fiscal year), management was hopeful that financial performance would stabilize or improve through additional measures such as store renovations and larger format outlets.
However, the sudden escalation in wage and tax costs appears to have accelerated the lockdown programme. Although a specific number of additional closures has not been disclosed, it is clear that the company is adopting a more defensive stance in the face of economic headwinds.
Analysts were divided over the chain’s justification for holding the closures on budget. Some questioned this logic, pointing out that shoes are usually considered non-optional purchases. However, others pointed to Shoe Zone’s history of prudent cost management and store turnaround efforts, suggesting that the retailer is simply taking a disciplined approach to store economics, and refusing to prop up loss-making branches in such turbulent times.
Zeus Capital, for example, acknowledged the group’s resilience, citing strong fundamentals: zero financial debt and a track record of clawing back dividends as soon as trading conditions allow. While investors may find little comfort in the near-term turmoil, Xu Zhong’s quick and decisive response to changing economic pressures may ultimately serve its interests in the long term.