A shoe shop chain with four outlets in the north and north-east has seen its half year-profits plunge by 84%.
Shoe Zone, which has shops in Aberdeen, Inverness, Peterhead and Elgin, has seen buying costs soar because of the Brexit-hit pound and sales fall amid an overhaul of its network of stores.
The Leicester-based group’s pre-tax profits tumbled to £309,000 in the six months to April 1, from £1.9million a year earlier.
Shoe Zone buys its stock from China in US dollars and has been hit hard by sterling’s fall since the EU referendum.
Sales also came under pressure, down 2.3% to £72.9million, as a restructure of its store estate saw the group close 12 outlets and open nine, including one in its new “Big Box” format.
Nick Davis, chief executive of Shoe Zone, said: “I am pleased with the group’s performance in the first half as we continued to actively manage the retail estate while driving profitable sales.
“The devaluation of sterling against the dollar has impacted the group’s statutory profits in the period, however, as we reach the annualised re-basing of this rate, we anticipate the ongoing impact will be significantly reduced.”
Even with the sterling impact stripped out, underlying profits fell to £1.3million from £1.7million.
The group also cautioned that high street conditions will remain “uncertain given the political environment in the UK and across Europe in the coming months.”
Shoe Zone’s currency woes were compounded as it also bought extra stock to fit out its new Big Box stores.
The group has three of the new format outlets, including its branch in Aberdeen’s Union Street, and plans to have 10 by the end of the year.
It is also increasing sales of non-footwear ranges, such as handbags, school bags, lunch boxes, purses and accessories, which saw growth of 24% in its first half.
Shoe Zone, which has 594 stores across the UK and Ireland, added that it is now selling across Europe through Amazon Marketplace.
Mr Davis said the group had traded “broadly in line with management’s expectations” since the start of April.
