A popular footwear retailer in the UK, Shoe Zone, has announced it will close multiple stores.
The company blamed the extra costs resulting from changes to wages and national insurance contributions (NICs) in October’s budget. It also announced the closure of several branches, including Burnham-on-Sea and Boscombe.
Shoe Zone said it has experienced “very challenging trading conditions” due to increased costs of the UK government’s latest budget, which included hikes in National Insurance contributions and the National Living Wage.
Currently, Shoe Zone operates 297 stores and employs approximately 2,250 staff members. The company closed 53 stores while opening 27 new ones during the year ending September 28, 2024, resulting in a net loss of 26 locations.
Although the consumer confidence had weakened further after the budget on 30 October and had made a number of its shops “unviable.”
The closures are not limited to specific regions; they will affect both high street and regional locations.
Four stores in Kent- specifically in Ashford, Folkestone, Herne Bay, and Gillingham—are unviable due to the increased financial burdens imposed by the government.
The company now expects profits for the financial year ending September 2025 to be around 5 million euros, halving its previous estimate of 10 million euros.
This profit warning marks the second such announcement in recent months as Shoe Zone grapples with ongoing challenges that have seen annual sales drop by 2.7% compared to the previous year.
Chancellor Rachel Reeves recently revealed an increase in the rate of employers NICs from 13.8% to 15%, effective from April next year.
Additionally, the threshold for employers to begin paying this tax on each employee’s salary has been lowered from 9100 euros to 5000 euros.
These changes are expected to rise approximately in the retail and hospitality sectors, which argue that they will be forced to cut jobs and increase prices.
Andrew Bailey, the governor of the Bank of England, highlighted businesses’ reactions to the NICs increase as the “biggest issue” facing the UK economy following the budget announcement, especially amid rising economic uncertainty both domestically and globally.
Shoe Zone now anticipates an adjusted pre-tax profit of about 5 million euros for the year ending September 27, down from previous estimates of 10 million euros.
Furthermore, it suspended its dividend for the financial year that ended in late September.
In response to these developments, Shoe Zone’s shares plummeted by as much as 44%, trading at 75p—66% lower than at the beginning of the year.
Although Shoe Zone moves forward with its store closures and restricting efforts, it remains focused on adapting to the challenging retail landscape shaped by economic pressures such as inflation and shifting consumer preferences towards online shopping.
