Shoe Zone share price collapses as CEO quits amid sales target miss
Investors trod all over Shoe Zone today after warned them it would miss full year sales targets and its chief executive officer, Nick Davis, quit with immediate effect.
Aim-listed Shoe Zone’s share price plunged 37.8 per cent in early trading to leave shares languishing at 119.5p, down from yesterday’s close at 192p.
Read more: Falling rents help Shoe Zone walk to a profit
CEO Nick Davis “has tendered his resignation in order to leave Shoe Zone and pursue other business interests”, the company told investors this morning.
Davis’ departure comes as the board warned shareholders that it will miss full year expectations after “challenging” trading conditions over summer.
“Whilst the Big Box and digital growth elements of the group’s strategy are progressing strongly, in the short term, their performance has been offset by the tough high street trading environment,” Shoe Zone said.
It will also take a writedown on the value of 17 freehold properties by £3.1m to £5.3m.
“As has been widely publicised, the UK high street is currently facing a challenging environment in which to operate,” said Anthony Smith, who will return to the role of CEO from his position as executive chairman.
“The pressure on the retail property market has enabled Shoe Zone to achieve an average 23.5 per cent fall in rents on renewal and average outstanding lease length of only two years. As a consequence of this and the tough freehold property market, our freehold assets had to be revalued to represent fair value and give us future flexibility.”
This write-down will not impact Shoe Zone’s dividend this year, he added, which will be calculated on underlying performance.
Finncap – an Aim broker – slashed its profit-before-tax predictions by around 14 per cent to £9.5m.
But Finncap’s Peter Smedley said the trading conditions would pass and added that he has confidence in the company’s strategy, which has not changed.
“We believe that the strategy remains firmly on track, and the group has continued to deliver stable gross margins, tight cost control and strong focus on cash – some of SHOE’s historical strengths,” Smedley said.
The broker cut its target price from 240p per share to 220p, calling the challenges for Shoe Zone “short-term” obstacles.
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Falling rents helped Shoe Zone hit a £1m profit despite high street headwinds for other retailers in its half-year results announced in May.
Shoe Zone will give shareholders more details in its full-year trading update on 24 October.