Major UK high street footwear retailer Shoe Zone has reported significantly widened losses, attributing the downturn to the ongoing Middle East conflict. The chain, which operates 259 stores, warned that the war in Iran is driving up business costs and dampening shopper confidence.
Financial Performance
For the six months to 28 March, Shoe Zone posted a pre-tax loss of £5.3 million, a substantial increase from the £2.3 million loss recorded in the same period last year. Revenues declined by 12 per cent year-on-year to £62.9 million, partly due to operating with 19 fewer stores following a series of closures.
The retailer attributed slower trading to reduced consumer confidence, citing recent Government budget announcements and the war in Iran. This resulted in fewer visitors to shops and less spending on nonessential items.
Impact of Middle East Conflict
Shoe Zone told investors that the conflict has led to higher transportation costs and pushed up the price of containers used for shipping. These factors are expected to weigh on financial performance for the rest of the year. The closure of the Strait of Hormuz, a key international shipping waterway, has surged fuel costs, impacting businesses across manufacturing, transport, and supply chains.
The retailer 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.
Broader Retail Impact
Last week, sports fashion retailer JD Sports also warned over potential higher prices and weakening consumer demand if costs continue to rise. Shoe Zone highlighted efforts to relocate and revamp its retail chain into newer and bigger formats, aiming to complete this by the end of 2027. Meanwhile, it is reducing the size of its distribution centre to reflect fewer stores and to 'right size' for the future.
Shoe Zone shares were down about 3.5 per cent in early trading.
