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”.
Maplin, Toys R Us and Jacques Vert have all collapsed in recent months, but several retailers and restaurant groups are facing financial problems and are trying to close stores or negotiate rent cuts.
Gourmet Burger Kitchen: The upmarket burger chain wants to close 17 of its 85 restaurants via an insolvency process known as a company voluntary arrangement (CVA)
House of Fraser: The department store chain is expected to close about 12 stores after being bought out of administration by Mike Ashley. It had agreed a CVA under which 31 stores were to close, but this lapsed on administration.
Homebase: The DIY chain is closing at least 42 stores after completing a CVA organised by new owner Hilco. The restructuring expert bought the DIY chain for £1 from Australia's Wesfarmers who botched an attempt to bring its Bunnings chain to the UK.
Poundworld: The discount retailer has closed all its 355 stores, with the loss of 5,100 jobs after falling into administration in June.
Cau: The owner of the Gaucho and Cau steakhouses fell into administration in July leading to the closure of all 22 Cau restaurants, with loss of 750 jobs. The groups lenders have since bought the 16 Gaucho outlets.
Mothercare: The chain is closing 60 of its 137 outlets after agreeing a CVA in May. Additional closures in July mean 900 jobs will be lost.
Carluccio's: The Italian chain secured a CVA to close 30 of its 99 restaurants in late May.
New Look: The chain is closing 85 stores in a restructuring plan announced earlier this year. Its chairman, Alistair McGeorge, said the future of a further 39 stores was in doubt as talks with landlords continued.
Carpetright: The retailer obtained a CVA in April to close 92 of its 409 UK stores in September with the loss of about 300 jobs.
Prezzo: In March the Italian-themed restaurant group secured a CVA to close 94 of its 300 restaurants, with the loss of 500 jobs. Rent cuts were agreed on a further 57 locations.
Jamie’s Italian: The chain closed six locations in 2017 and this year agreed a CVA to close about a third of its 35 loss-making outlets.
Byron: The upmarket burger chain is closing up to 20 of its 67 restaurants after a CVA agreed in January.
Debenhams: The under-pressure department store chain has said it could close up to 50 of its 165 stores stores and wants to get rid of space at 30 more by bringing in gyms and other services.
M&S: The high street stalwart wants to close 100 outlets – a third of its main stores by 2022 as part of a 'radical transformation' plan.
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.”
