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British footwear chain Shoe Zone has blamed further prices arising from the current UK Budget for its determination to close retailers because it warned on earnings and suspended its dividend, sending shares within the firm down nearly 40 per cent.
The Intention-listed group, which has 297 shops and employs about 2,250 employees throughout the nation, stated in an unscheduled replace to traders on Wednesday that further prices regarding will increase in employers’ nationwide insurance coverage and the nationwide dwelling wage “have resulted within the deliberate closure of various shops which have now turn into unviable”.
It stated it has been going through “very difficult situations” and weaker shopper confidence since chancellor Rachel Reeves unveiled the adjustments in October.
Shoe Zone now anticipated adjusted revenue earlier than tax to be not less than £5mn for the 12 months to September 27 2025, down from earlier expectations of £10mn. It will not pay a last dividend for 2024, it added.
The shares closed down in London buying and selling by 39.1 per cent, to 84.2p, giving it a market capitalisation of about £40mn.
Nick Bubb, an impartial retail analyst, stated Shoe Zone’s revenue warning “might rattle just a few nerves within the sector”.
UK retailers final month collectively warned of annual prices of as much as £7bn following the Finances, in addition to job losses, store closures and better costs.
Giant employers corresponding to Tesco, Subsequent and Marks and Spencer all signed a letter to the Chancellor saying that “the impact will likely be to extend inflation, gradual pay progress, trigger store closures, and scale back jobs, particularly on the entry degree”.
Nevertheless, Russ Mould, funding director at AJ Bell, wrote in a observe that “Shoe Zone placing the blame for a significant revenue warning on the Finances appears a poor match” as shopper confidence has ticked up in current weeks for the reason that Finances.
He added: “Poor autumn climate gained’t have helped however Shoe Zone doesn’t promote a discretionary product — it sells inexpensive footwear, for which demand ought to be comparatively resilient.
“Maybe Shoe Zone’s providing isn’t resonating with customers as a lot because it used to.”
The Treasury has beforehand stated: “With our public companies crumbling and a £22bn fiscal black gap we needed to make tough decisions to repair the foundations of the nation and restore desperately wanted financial stability. This was a as soon as in a parliament funds to wipe the slate clear.”
