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British footwear chain Shoe Zone has blamed extra costs arising from the recent UK Budget for its decision to shut shops as it warned on profits and suspended its dividend, sending shares in the company down almost 40 per cent.
The Aim-listed group, which has 297 outlets and employs about 2,250 staff across the country, said in an unscheduled update to investors on Wednesday that additional costs relating to increases in employers’ national insurance and the national living wage “have resulted in the planned closure of a number of stores that have now become unviable”.
It said it has been facing “very challenging conditions” and weaker consumer confidence since chancellor Rachel Reeves unveiled the changes in October.
Shoe Zone now expected adjusted profit before tax to be at least £5mn for the year to September 27 2025, down from previous expectations of £10mn. It would not pay a final dividend for 2024, it added.
The shares closed down in London trading by 39.1 per cent, to 84.2p, giving it a market capitalisation of about £40mn.
Nick Bubb, an independent retail analyst, said Shoe Zone’s profit warning “could rattle a few nerves in the sector”.
UK retailers last month collectively warned of annual costs of up to £7bn following the Budget, as well as job losses, shop closures and higher prices.
Large employers such as Tesco, Next and Marks and Spencer all signed a letter to the Chancellor saying that “the effect will be to increase inflation, slow pay growth, cause shop closures, and reduce jobs, especially at the entry level”.
However, Russ Mould, investment director at AJ Bell, wrote in a note that “Shoe Zone putting the blame for a major profit warning on the Budget seems a poor fit” as consumer confidence has ticked up in recent weeks since the Budget.
He added: “Poor autumn weather won’t have helped but Shoe Zone does not sell a discretionary product — it sells affordable footwear, for which demand should be relatively resilient.
“Perhaps Shoe Zone’s offering isn’t resonating with shoppers as much as it used to.”
The Treasury has previously said: “With our public services crumbling and a £22bn fiscal black hole we had to make difficult choices to fix the foundations of the country and restore desperately needed economic stability. This was a once in a parliament budget to wipe the slate clean.”