Shoe Zone PLC (LSE:SHOE) reported a 4.5% decline in revenue to £142.4 million for the 53 weeks ended 3 October 2026, reflecting a reduction in its retail store estate and lower consumer spending, according to the company’s unaudited full-year trading update.
The footwear retailer expects an adjusted loss before tax of approximately £1.0 million, compared with an adjusted profit of £2.4 million in FY2025. However, its product margin increased to approximately 63.1%, while year-end net cash rose to £15.1 million from £5.9 million.
Shoe Zone also confirmed that its store portfolio declined to 251 locations and indicated that it expects to declare no final dividend for FY2026.
FY2026 Revenue Falls 4.5% as Store Numbers Decline
Shoe Zone reported unaudited revenue of £142.4 million for FY2026, compared with £149.1 million in the previous financial year.
The £6.7 million reduction represents a year-on-year decline of 4.5%.
The company attributed the decrease partly to operating 18 fewer stores at the end of the reporting period, alongside reduced consumer confidence and wider economic conditions affecting discretionary spending in the United Kingdom.
Management said sales benefited from specific seasonal purchasing periods, including warmer summer weather and the back-to-school season, but overall trading remained affected by lower consumer expenditure.
Digital revenue was broadly unchanged from the previous financial year.
The company also reported that trading during the opening weeks of the Autumn/Winter season was below its expectations, affecting the final weeks of FY2026 and continuing into FY2027.
Adjusted Loss Before Tax Expected at £1 Million
Shoe Zone expects to report an unaudited statutory loss before tax of approximately £0.6 million for FY2026, compared with a statutory profit before tax of £3.3 million in FY2025.
After excluding a £0.4 million foreign exchange revaluation gain, the company expects an adjusted loss before tax of approximately £1.0 million.
This compares with adjusted profit before tax of £2.4 million in the preceding financial year.
The company said the change in profitability reflected lower revenue, the full-year effect of increased employer National Insurance contributions and a further increase in the National Living Wage.
These factors were partly offset by an improvement in product margins.
Management confirmed that the expected adjusted loss is consistent with its existing expectations for the financial year.
Product Margin Increases to 63.1%
Shoe Zone reported an increase in product margin to approximately 63.1% in FY2026, compared with 61.0% in FY2025.
The improvement of 2.1 percentage points was primarily attributed to lower and less volatile shipping container costs and a more favourable sterling-to-US dollar exchange rate during the reporting period.
However, the company reported that container prices increased towards the end of the financial year.
Management attributed the increase to disruption at Chinese ports and geopolitical developments affecting fuel prices.
Shoe Zone also identified a subsequent weakening of sterling against the US dollar as a potential additional cost pressure.
The company expects these developments could negatively affect product margins in the current financial year.
Net Cash Rises to £15.1 Million
Shoe Zone ended FY2026 with net cash of approximately £15.1 million, compared with £5.9 million at the end of FY2025.
The increase of £9.2 million was primarily attributed to lower capital expenditure, reduced product costs and an overall reduction in the cost of sales.
The company continues to manage expenditure while limiting investment in its retail estate to essential requirements.
Management said cash management remains a priority as the business responds to current trading conditions and changes in operating costs.
Despite the increase in net cash, the board expects to maintain its policy of not distributing a dividend for FY2026.
Retail Estate Reduced to 251 Stores
Shoe Zone operated 251 retail stores at the end of FY2026, compared with 269 locations a year earlier.
The reduction of 18 stores represents a 6.7% decrease in the total estate.
During the financial year, the company closed 25 stores, opened seven new locations and completed six store refits.
The retail portfolio now comprises 211 larger-format stores and 40 original High Street locations.
Shoe Zone continues to pursue its strategy of transitioning towards larger-format stores, although management said the pace of investment has slowed as the programme approaches completion.
The company is currently restricting capital expenditure to essential projects.
According to management, the larger-format conversion programme has reached 211 completed locations.
No Final Dividend Expected for FY2026
Shoe Zone confirmed that no interim dividend was declared for the first half of FY2026.
The company also expects to declare no final dividend for the financial year.
Management said the decision reflects its approach to cash management and capital expenditure during the current trading environment.
The company has not announced a timetable for resuming dividend payments.
FY2027 Trading Begins Below Management Expectations
Shoe Zone reported that the Autumn/Winter trading season began more slowly than anticipated, with the trend continuing into the new financial year.
Management expects near-term trading conditions to remain subdued, citing consumer spending patterns and broader economic uncertainty.
The company is monitoring developments in shipping costs, fuel prices and foreign exchange rates, all of which could affect future operating costs and product margins.
Shoe Zone also referred to the UK government’s October 2026 Budget as an upcoming factor in its assessment of the operating environment.
The board said it would continue to manage cash and expenditure while monitoring changes in consumer demand.
The trading update did not provide specific revenue or profit guidance for FY2027.
Chairman Comments on Trading Conditions
Charles Smith, chairman of Shoe Zone, commented on the company’s financial performance and the factors affecting consumer spending:
“This was a challenging year, particularly in the first half, as consumer confidence continued to be weak, and fell further following the Government’s November 2025 budget, with persistent inflation, higher interest rates remaining elevated and reduced levels of disposable income all contributing to a generally negative economic and consumer sentiment in the UK. Sales were good when there was a clear reason to buy, such as the warm summer and the Back-To-School season. However, overall discretionary spending remains subdued as consumers exercise greater caution in their expenditure.
Digital revenue was in line with last year and the ongoing strategy of refitting and relocating stores to our larger format continued, albeit at a slower pace as we get towards the end of the project with 211 conversions completed, alongside net cash levels improving year-on-year.
A more detailed update will be provided at the time of our final results in January 2027.
I would like to thank all of our teams for their continued commitment and hard work in a very challenging year.”
The company expects to provide further details of its financial performance and operational plans when it publishes its full-year results in January 2027.
More About Shoe Zone
Shoe Zone PLC (LSE:SHOE) is a UK footwear retailer operating a network of larger-format and traditional High Street stores, alongside its digital sales business.
At the end of FY2026, the company operated 251 stores, comprising 211 larger-format locations and 40 original High Street stores.
For the 53 weeks ended 3 October 2026, Shoe Zone reported revenue of £142.4 million, a product margin of approximately 63.1% and year-end net cash of £15.1 million.
The company expects an adjusted loss before tax of approximately £1.0 million and a statutory loss before tax of £0.6 million.
Management continues to focus on cash management and its retail estate strategy while assessing trading conditions in FY2027. Full-year financial results are expected in January 2027.
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