Shares in Shoe Zone have plunged by a third after the low-cost footwear retailer issued a profit warning and said its chief executive had resigned.
The group, which has more than 500 stores in the UK and Ireland, blamed the profits blow on tough high street trading conditions and said it was writing down the value of its 17 freehold properties by £3.1m to £5.3m.
Nick Davis, the group’s chief executive who has led the company for three years and was finance director for nine years, has stepped down with immediate effect to “pursue other business interests”.
He will be replaced by Anthony Smith, the executive chair. Smith’s brother Charles, who joined the company in 1998, five years after Anthony, is now interim executive chair.
The company said on Friday that while its larger out-of-town “big box” stores and digital sales were “progressing strongly”, their performance had been offset by a “tough high street trading environment”, which mean profits for the year to 5 October would be lower than previously expected.
Anthony Smith said: “As has been widely publicised, the UK high street is currently facing a challenging environment in which to operate.
“While we therefore face a short-term impact on our balance sheet, we do not anticipate any change to our dividend policy, reflecting our confidence and excitement in the long-term growth opportunities through the big box roll-out, continued operational improvements and our multi-channel proposition.”
Shoe Zone is the latest victim of a high street crisis that has forced a number of well-known retailers, including Debenhams, House of Fraser and New Look, to close stores or enter administration amid a slowdown in consumer spending and rising costs partly linked to the fall in the value of the pound since the Brexit vote but also from business rates and the legal minimum wage.
Physical stores, including on retail parks where Shoe Zone has been expanding, have also been hit by a switch towards online shopping.
The independent retail analyst Nick Bubb said: “Shoe Zone has always seemed a likely candidate for a profit warning, but it has always found a way to deliver the goods in the past and the share price has been surprisingly stable since the [stock market debut] five years ago.”
Some analysts expressed surprise that Shoe Zone was experiencing difficulties as it had previously seemed resilient to the market pressures thanks to its cut-price products and efforts to persuade landlords to reduce rents.
Russ Mould, the investment director at AJ Bell, said: “To now have a profit warning would suggest the retail sector is still a brutal place in which to operate. The high street is to blame for Shoe Zone’s woes, with the company’s underperformance understood to be across all regions, product types, prices and brands.”