High street retailer Shoe Zone has warned that the Middle East conflict is pushing up business costs and adding to shoppers' worries, as it reported widening losses. The chain, which runs 259 stores, has been shutting shops and is in the process of cutting the size of its warehouse.
The company reported a pre-tax loss of £5.3 million for the six months to March 28, widening from the £2.3 million loss recorded in the same period last year. Revenues fell by 12% year-on-year to £62.9 million, partly due to there being 19 fewer stores than the previous year after a series of closures.
Shoe Zone also blamed slower trading on consumers being less confident to spend as a result of the two latest Government budget announcements and, more recently, the war in Iran. This has resulted in fewer visitors to shops and less spending on nonessential items, according to the firm.
At the same time, the retailer told investors that the conflict had led to higher transportation costs and pushed up the price of containers used for shipping, which it expects to weigh on financial performance for the rest of the year. As a result, it now expects to report an adjusted pre-tax loss of between £1 million and £2 million for the full year, having previously guided towards a £1 million profit.
The conflict and the closure of the international shipping waterway the Strait of Hormuz led to a surge in the cost of fuel, impacting businesses that rely on fuel for manufacturing, transport, or supply chains. Last week, rival retailer JD Sports warned over the potential for higher prices and a weakening of consumer demand if costs continue to rise.
Meanwhile, Shoe Zone highlighted efforts to relocate and revamp its retail chain into newer and bigger formats, which it wants to complete by the end of 2027. It also said it was reducing the size of its distribution centre to reflect the fact that it had fewer stores and to 'right size' for the future.
