“The UK's largest value footwear retailer”, Shoe Zone (SHOE) has announced results for the 53-week period ended 5th October 2019 and that it “has made a solid start to the year and is trading in line with market expectations. The board is positive about the outlook for the year with the refreshed strategy well underway”…
The results show an adjusted pre-tax profit of £9.6 million on revenue of £162 million, generating earnings per share of 16.45p. The earnings were though down from the prior year – more than 19p earnings per share, with the company particularly noting “the phasing of store openings and increases in staff costs in line with the minimum wage”. It though added, including “demonstrates our confidence in the future growth of the business”, that it is “proposing to maintain the final dividend of 8.0p (2018: 8.0p) per share, giving a total ordinary dividend for the year of 11.5p (2018: 11.5p) per share… payable on 18 March 2020 if approved at the Annual General Meeting… the shares will go ex-dividend on 27 February 2020”. Year-end cash (net) was £11.4 million (22.8p per share).
The noted “refreshed strategy” is for “Big Box expansion, higher Digital growth and Town Centre renewal”. It is stated “the Big Box portfolio has expanded by 21 stores to a total of 39 stores operational at year end… revenue of £15.6m… and profit contribution of £1.5m in the period”, “Digital revenue was £10.6m (2018: £9.7m) with contribution of £3.0m (2018: £2.6m)… during 2019 we consolidated our internal resource to create an autonomous Digital department. This investment, allied with a drive to expand our email database and increase the volume of offers sent out has resulted in a step change in Digital performance” and “we have been trialling four Hybrid stores, in which 50% of the Big Box range (total style count of 550) is sold within a traditional Shoe Zone store with enhanced fixtures and fittings. The stores have performed extremely well… We now believe this will form the backbone of our Town Centre renewal strategy”. It is added “it is vital that Government recognises the impact of the increasing financial burden placed on businesses on the High Street by successive governments and their policies”, though also “an average lease length of 2.1 years… rents at lease renewal falling by 23.6%... we expect that this trend will continue as supply in the retail property market continues to outstrip demand and properties fall vacant following CVAs and Administrations”.
House broker finnCap is looking for pre-tax profit to grow to £10.5 million this year, generating earnings per share approaching 18p and seeing a further maintained dividend. However, even the just reported performance looks to sit well against a current 162.5p share price – the final dividend alone equating to a nearly 5% yield. The performance since August profit warning and CEO change has vindicated our decision to stick with this but, for income and further recovery – the shares reached 240p+ early last year, at around current share price levels our stance remains buy.
This article first appeared on the N50 website which Tom Winnifrith runs with Steve Moore & Lucian Miers. To access the website ahead of the next share tip from Tom & Steve and a new shorting piece this week click HERE
Filed under: Shoe Zone, Versarien, City Pub Group, Anglo African Oil & Gas, Zenith Energy, Neill Ricketts
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