TIDMSHOE
RNS Number : 9084Y
Shoe Zone PLC
18 May 2021
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the company's obligations under Article 17 of MAR. Upon the
publication of this announcement via regulatory news service this
inside information is now considered to be in the public
domain.
SHOE ZONE PLC
INTERIM RESULTS
Shoe Zone PLC ("Shoe Zone", the "Company") is pleased to
announce its interim results for the six months to 3 April 2021.
(the "Period")
Financial Update
-- Revenue of GBP40.4m (2020 H1: GBP68.9m)
o Store revenue GBP22.8m (2020 H1: GBP63.3m)
o Digital revenue GBP17.6m (2020 H1: GBP5.5m)
o Digital contribution of GBP5.3m (2020 H1: GBP1.9m)
o Digital conversion rate 6.43% (2020 H1: 3.47%)
o Over 1.0 million engaged users in shoezone.com database
-- Statutory loss before tax GBP(2.6)m (2020 H1: GBP(2.5)m as a
result of tight cost control and increase in digital.
-- Statutory earnings per share (4.2)p (2020 H1: (4.1)p)
-- Net cash balance of GBP4.1m (2020 H1: GBP3.6m)
-- No interim dividend to be paid (2020 H1: no dividend)
Business and COVID-19 Update
-- All stores closed for a minimum of 16 weeks in the Period
-- Digital and Warehouse teams operated throughout the lockdowns
-- Supply chain disruption due to container shortages and Ever Given/Suez Canal issues
-- Continual cash preservation action taken throughout the
period resulting in net cash of GBP4.1m at the end of the
Period
-- Ongoing negotiations with Landlords and suppliers
-- Majority of staff furloughed and we have used the Government
business support schemes including grants, rates and VAT
-- CLBILS loan of GBP15m in place and drawn down. GBP4.6m repaid
-- Store numbers are 422 having reduced by 38 in the period. A
full review of individual store viability will now continue
-- Exit from the Republic of Ireland with all stores and shoezone.ie now closed
For further information please call:
Shoe Zone PLC Tel: via 0116 222 3000
Anthony Smith (Chief Executive)
Terry Boot (Finance Director)
Finncap (Nominated Advisor and Broker) Tel: 020 7220 0500
Matt Goode (Corporate Finance)
Kate Bannatyne (Corporate Finance)
Alice Lane (ECM)
Chief Executive's statement
Introduction
The last 12 months have been like no other in the company's
history. The COVID-19 pandemic has had a huge social and economic
impact around the world and has led to huge consequences for all
businesses, including our own, as we have had to adapt and change
to meet the significant challenges in the last year and I thank our
loyal and committed staff during this period. However, we have come
through this challenging period and are now in position to continue
our strategy going forward, with the assumption that no further
lockdowns are required.
The company currently operates from a portfolio of around 422
stores (38 closed in the period with 3 stores refitted and 1
relocation to new formats). We operate a comprehensive digital
proposition, enabling it to provide a multi-channel shopping
experience to its customers.
Since the period end we have relocated a further 3 stores.
Strategy Update
The strategy outlined before the COVID-19 pandemic took hold, is
still the general direction the Directors believe is the route to
be taking going forward. The last 12 months has demonstrated the
need to build on the significant successes within our Digital
business. The investments we have made have put us in a strong
position to enable our customers to buy throughout the lockdown,
resulting in strong growth over this period. Digital growth will
continue to be a big part of our future strategy along with our
focus on Big Box and Hybrid expansion. These new stores will be at
a lower pace due to cash constraints.
COVID-19 Update
We have had to adapt and reshape our business to react to
extremely difficult trading conditions. We enter the second half of
the financial year with the hope that we have seen the worst of the
COVID-19 impact and look forward to the stores getting back to what
we would call "normal" trading conditions, with no further
lockdowns.
No stores were open in the first 2 weeks of the 2(nd) half.
Trading started strongly but has settled down to a more mixed
picture of good High Street and retail park sales but weaker
shopping centre performance.
Financial Summary
In the six months to 3 April 2021, the company generated
revenues of GBP40.4m (2020 H1: GBP68.9m) and a loss before tax of
GBP(2.6)m (2020 H1 GBP(2.5)m).
The reduction in revenue over the prior year reflects the
continued impact of COVID-19. During the six months we experienced
significant disruption in the supply chain and a fall in consumer
spending for a significant number of months in the period,
particularly in Jan, Feb and March when all stores were closed. In
the period we saw an increase in Digital sales to GBP17.6m compared
to last year of GBP5.5m, however the store deficit was GBP40.5m
compared to last year.
The gross profit for this year reflects the sales related margin
reduction year on year due to clearing excess stock and the benefit
of the Government COVID business support schemes. Admin and
distribution costs are higher than last year primarily due to
GBP3.1m additional expenditure relating to the increase in Digital
sales and a GBP0.5m increase due to foreign exchange
revaluation.
The company ended the period with a net cash balance of GBP4.1m
(2020 GBP3.6m). The increase in cash balance has been achieved
through the measures taken by the business over the last 12 months,
which restricted cash out of the business but also took advantage
of the Government furlough scheme, the business rates holiday,
retail grants and the ability to delay VAT. We should state that,
compared to last year, we are behind on rental payments as we
continue to negotiate better terms with Landlords.
Dividend
We are continuing to focus on cash preservation as the business
comes out of lockdown and therefore no interim dividend will be
paid. Our dividend policy remains on hold as previously stated.
Unaudited consolidated income statement
26 Wks end 26 Wks end 52 Wks end
3 Apr 2021 4 Apr 2020 3 Oct 2020
GBP'000 GBP'000 GBP'000
Revenue 40,435 68,944 122,568
Cost of Sales (29,804) (61,262) (114,455)
----------- ----------- -----------
Gross Profit 10,631 7,682 8,113
Administration Expenses (7,906) (6,273) (13,928)
Distribution
Costs (4,477) (2,927) (6,895)
----------- ----------- -----------
Loss from Operations (1,752) (1,518) (12,710)
Finance Income 0 (1) 10
Finance Expense (860) (1,009) (1,901)
----------- ----------- -----------
Loss before Taxation (2,612) (2,528) (14,601)
Taxation 497 480 2,698
Loss attributable to equity holders
of the parent (2,115) (2,048) (11,903)
=========== =========== ===========
Earnings per
Share (4.2)p (4.1)p (23.8)p
Unaudited consolidated statement of total comprehensive
income
26 Wks 26 Wks 52 Wks
end end end
3 Apr 4 Apr 3 Oct
2021 2020 2020
GBP'000 GBP'000 GBP'000
Loss for the period (2,115) (2,048) (11,903)
-------- -------- ---------
Items that will not be reclassified subsequently
to the
income statement
DB pension scheme 2,769 (642) (2,114)
Movement in deferred tax on
pension schemes (526) 94 899
IFRS-16 Opening
balances 0 (3,242) 0
Cash flow hedges
Fair value movements in other comprehensive
income (1,903) (2,431) (2,124)
Cash flow hedges recognised
in inventories 0 2,868 0
Tax on cash flow
hedges 364 (74) 363
-------- -------- ---------
Other comprehensive (expense)/Income
for the period 704 (3,427) (2,976)
Total comprehensive (expense)/Income
for the period (1,411) (5,475) (14,879)
======== ======== =========
attributable to equity holders
of the parent
Unaudited consolidated statement of financial position
26 Wks end 26 Wks end 52 Wks end
3 Apr 2021 4 Apr 2020 3 Oct 2020
GBP'000 GBP'000 GBP'000
Assets
Non-current
Assets
Property, plant and
equipment 14,733 22,669 16,967
Right of use
assets 36,464 53,456 42,387
deferred tax
asset 5,455 1,597 5,617
----------- ----------- -----------
Total Non-current
assets 56,652 77,722 64,971
Current Assets
Inventories 28,433 25,727 26,698
Trade and other receivables 3,524 4,978 2,735
Derivative financial
assets 0 2,751 0
Cash and cash equivalents 14,473 3,571 13,266
----------- ----------- -----------
Total Current
Assets 46,430 37,027 42,699
Total Assets 103,082 114,749 107,670
Current Liabilities
Trade and other payables (12,250) (31,167) (17,316)
Lease liabilities (15,629) 0 (19,914)
Derivative financial
liability (2,620) 0 (105)
Bank loans (4,800) 0 (1,944)
Provisions (1,756) (573) (1,471)
Corporation tax liability 0 0 (137)
----------- ----------- -----------
Total Current Liabilities (37,055) (31,740) (40,887)
Non-Current Liabilities
Trade and other payables 0 0 0
Lease liabilities (40,042) (46,521) (37,475)
Bank loans (5,600) 0 (5,056)
Provisions (1,499) (581) (1,260)
Employee benefit
liability (7,899) (9,952) (10,594)
----------- ----------- -----------
Total Non-Current
Liabilities (55,040) (57,054) (54,385)
Total liabilities (92,095) (88,794) (95,272)
Net Assets 10,987 25,955 12,398
=========== =========== ===========
Equity attributable to equity holders
of the company
Called up share capital 500 500 500
Merger reserve 2,662 2,662 2,662
Cash flow hedge reserve (1,654) 2,008 (116)
Retained earnings 9,479 20,785 9,352
Total Equity and
Reserves 10,987 25,955 12,398
=========== =========== ===========
Unaudited consolidated statement of changes in Equity
Share Share Cash flow Retained Total
Capital Premium Hedge Earnings
Reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At October 2019 500 2,662 1,645 26,623 31,430
-------- -------- ---------- --------- ---------
Loss for the period 0 0 0 (2,048) (2,048)
Defined benefit pension movements 0 0 0 (642) (642)
cash flow hedge movements 0 0 437 0 437
Right of use asset movement 0 0 0 (3,242) (3,242)
Deferred tax on other comp.
income 0 0 (74) 94 20
-------- -------- ---------- --------- ---------
Total comprehensive income
for the period 0 0 363 (5,838) (5,475)
Dividends paid 0 0 0 0 0
-------- -------- ---------- --------- ---------
Contributions by and distribution
to owners 0 0 0 0 0
As at April 2020 500 2,662 2,008 20,785 25,955
-------- -------- ---------- --------- ---------
At October 2019 500 2,662 1,645 26,623 31,430
-------- -------- ---------- --------- ---------
Impact of transition to IFRS-16 0 0 0 (4,153) (4,153)
Loss for the period 0 0 0 (11,903) (11,903)
Defined benefit pension movements 0 0 0 (2,114) (2,114)
cash flow hedge movements 0 0 (2,124) 0 (2,124)
Deferred tax on other comp.
income 0 0 363 899 1,262
-------- -------- ---------- --------- ---------
Total comprehensive income
for the period 0 0 (1,761) (17,271) (19,032)
Dividends paid 0 0 0 0 0
-------- -------- ---------- --------- ---------
Contributions by and distribution
to owners 0 0 0 0 0
As at October 2020 500 2,662 (116) 9,352 12,398
-------- -------- ---------- --------- ---------
At October 2020 500 2,662 (116) 9,352 12,398
-------- -------- ---------- --------- ---------
Loss for the period 0 0 0 (2,115) (2,115)
Defined benefit pension movements 0 0 0 2,769 2,769
cash flow hedge movements 0 0 (1,903) 0 (1,903)
Deferred tax on other comp.
income 0 0 364 (526) (162)
-------- -------- ---------- --------- ---------
Total comprehensive income
for the period 0 0 (1,539) 128 (1,411)
Dividends paid 0 0 0 0 0
-------- -------- ---------- --------- ---------
Contributions by and distribution
to owners 0 0 0 0 0
As at April 2021 500 2,662 (1,655) 9,480 10,987
-------- -------- ---------- --------- ---------
Unaudited consolidated statement of cash flows
26 Wks 26 Wks 52 Wks
end end end
3 Apr 4 Apr 3 Oct
2021 2020 2020
GBP'000 GBP'000 GBP'000
Operating activities
Loss after tax (2,115) (2,048) (11,903)
Corporation tax (497) (480) (2,698)
Finance income 0 (8) (10)
Finance expense 860 1,018 1,901
Depn of property, plant and machinery 1,598 1,573 3,545
FA impairment and loss on disposal
of property, 840 66 4,642
plant and machinery
ROUA on disposal, depn and impairment 7,782 9,722 23,998
Pension contributions paid 0 (417) (1,466)
-------- --------- ---------
8,468 9,426 18,009
Decrease/(increase) in trade and
other receivables (789) 1,324 (810)
Decrease/(increase) in foreign
exchange contracts 613 0 336
Decrease/(increase) in inventories (1,735) 3,196 2,184
(Decrease)/increase in trade and
other payables (5,066) (17,857) (5,498)
Increase in provisions 524 110 1,646
-------- --------- ---------
(6,453) (13,227) (2,142)
-------- --------- ---------
Cash generated from operations 2,015 (3,801) 15,867
Net corporation tax paid 360 (1,888) (283)
-------- --------- ---------
Net cash flows from operating activities 2,375 (5,689) 15,584
-------- --------- ---------
Investing activities
Purchase of property, plant and
machinery (204) (2,165) (2,809)
Interest received 0 8 10
--------- ---------
Net cash used in investing activities (204) (2,157) (2,799)
-------- --------- ---------
New secured loan repayable by instalments 5,000 0 10,000
Repayment of secured loan (1,600) 0 (3,000)
Capital element of lease repayments (4,210) 0 (17,719)
Interest paid (154) 0 (217)
Dividends paid during year 0 0 0
--------- ---------
Net cash used in financing activities (964) 0 (10,936)
-------- --------- ---------
Net increase in cash and cash equivalents 1,207 (7,846) 1,849
Cash and cash equivalents at beginning
of period 13,266 11,417 11,417
Cash and cash equivalents at end
of period 14,473 3,571 13,266
======== ========= =========
Notes to the financial statements for the 26 weeks ended 3 April
2021
Basis for preparation
The consolidated interim financial statements of the company for
the 26 weeks ended 3 April 2021, which are unaudited, have been
prepared in accordance with the same accounting policies,
presentations and methods of computation followed in the condensed
set of financial statements as applied in the group's latest
audited financial statements. A copy of those accounts has been
delivered to the Registrar of Companies.
The financial information for the 26 weeks ended 3 April 2021,
contained in this interim report, does not constitute the full
statutory accounts for that period. The independent Auditors'
report on the Annual Report and Financial Statements for 2020 was
unqualified, did not draw attention to any matters by way of
emphasis. And did not contain a statement under 498(2) or 498(3) of
the Companies Act 2006.
The consolidated interim financial statements have neither been
audited nor reviewed pursuant to guidance issued by the Auditing
Practices Board.
The condensed consolidated interim financial statements have
been prepared on a going concern basis and under the historic cost
convention, as modified by the revaluation of derivative financial
instruments to far value.
The condensed consolidated interim financial statements are
presented in sterling and have been rounded to the nearest thousand
(GBP'000).
The preparation of financial information in conformity with IFRS
requires management to make estimates and assumptions that affect
the reported amount of assets and liabilities at the date of the
financial statements and the reported amount of revenues and
expenses during the reporting period. Although these estimates are
based on management's best knowledge of the amount, event or
actions, actual events ultimately may differ from those
estimates.
1. Accounting policies
In preparing these interim financial statements, the significant
judgements made by management in applying the group's accounting
policies and the key sources of estimation uncertainty were the
same as those applied to the consolidated financial statements
reported in the latest annual audited financial statements for the
52 weeks ended 3 Oct 2020.
Going Concern
At the balance sheet date the company had a good cash balance
and a strong net asset position. At the time of reviewing these
accounts, the Directors have considered the effect of COVID-19 on
the ongoing position, and consider that this does indicate that the
company will continue to trade for a period of at least 12 months
from the date of publishing these accounts due to the banking
facilities available to it and the UK Government support available
to businesses during this time.
The cash forecast prepared by the Directors show that the
company will be able to operate within the facilities available to
it and on that basis, the Directors have prepared these financial
statements on a going concern basis.
Events after the period end
Subsequent to the period end, the COVID-19 lockdown ended with
non-essential retailers able to open from April onwards. Assuming
that this will be the last period of lockdown, the Directors
believe that the company is strongly positioned to progress
positively.
2. Segmental Information
The group complies with IFRS 8 'Operating Segments' which
determines and presents operating segments based on information
provided to the chief operating decision maker. The chief decision
maker has been identified as the management team including the
Chief Executive and Finance Director. The Board considers that each
store is an operating segment but there is only one reporting
segment as the stores qualify for aggregation, as defined under
IFRS 8.
3 Apr 4 Apr 3 Oct
2021 2020 2020
External revenue by location
of customers: GBP'000 GBP'000 GBP'000
United Kingdom 21,934 61,871 100,098
Digital 17,624 5,471 19,296
Republic of
Ireland 675 1,602 2,678
Other 202 0 496
40,435 68,944 122,568
======== ======== ========
There are no customers with turnover in excess of 10% of total
turnover.
3 Apr 4 Apr 3 Oct
2021 2020 2020
Non-current assets
by location GBP'000 GBP'000 GBP'000
United Kingdom 15,732 22,650 16,962
Republic of
Ireland 0 19 5
15,732 22,669 16,967
======== ======== ========
3. Derivative financial assets
At the balance sheet date, details of the forward contracts that
the group has committed to are as follows:
3 Apr 4 Apr 3 Oct
2021 2020 2020
GBP'000 GBP'000 GBP'000
Derivative financial
assets
Not designated as hedging
instruments (578) 332 34
Designated as hedging instruments (2,042) 2,419 (139)
(2,620) 2,751 (105)
======== ======== ========
4. Taxation
The taxation credit for the 26 weeks ended 3 April 2021 is based
on an estimated effective tax rate for the full year of 19%
(2020:19%)
5. Earnings per share
3 Apr 4 Apr 3 Oct
2021 2020 2020
GBP'000 GBP'000 GBP'000
Profit in the period and earnings
used in basic
diluted earnings
per share (2,115) (2,048) (11,903)
(4.2)p (4.10)p (23.8)p
======== ======== =========
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