Retailer Shoe Zone is closing stores. The firm said the move is a response to rising wage costs after recent Budget measures.
It made the announcement as it warned over profits once again. The group employs around 2,250 staff across 297 stores in the UK.
It said Chancellor Rachel Reeves’ decision to put up employers’ national insurance contributions and raise the minimum wage had led to “significant additional costs”.
“These additional costs have resulted in the planned closure of a number of stores that have now become unviable,” it said. The firm did not reveal how many stores had shut.
It also made no mention of how many workers would be affected.
However, the group has already been shutting down loss-making stores over the past year. In October, it announced that 26 sites had been shut on a net basis – 53 shut down, along with 27 opened – in the year to September 28.
The company said it had also seen “very challenging trading conditions” since the end of September as shoppers have spent less amid unseasonal weather. They said consumer confidence had weakened further since the Budget in October.
Shares dropped by as much as 49% on Wednesday morning. The firm warned that due to the tough trading and extra wage bill, annual profits would be lower than expected.
It also cancelled its final shareholder dividend payout for 2023-24. Shoe Zone cut guidance by up to half.
It warned underlying pre-tax profits were now set to be not less than £5 million, down from £10 million previously expected for the year to September 27 next year. That profit warning is the second in as many months.
It also lowered guidance in October for the year to September 28 2024, blaming poor summer weather for lower sales. Shoe Zone said annual sales fell 2.7%, which it expected will leave 2023-24 profits at “not less than” £9.6 million against the £16.2 million reported the previous year.