Shoe Zone: Firm slams Budget tax hikes as it’s forced to close ‘unviable’ stores
Shoe Zone has said it has been forced to close “a number” of stores following higher costs announced in the Autumn budget.
The affordable footwear company said a combination of lower consumer confidence following the budget, plus “significant additional costs” due to the increases in National Insurance and the National Living Wage, have made the stores “unviable”.
Shoe Zone’s announcement is amongst the first concrete casualties of the budget.
Analysts widely expected the budget to have an outsized negative influence on labour intensive retail and construction companies.
“In retail and hospitality, the challenge is especially tough… These are low-margin sectors, so there’s no real room to absorb higher costs,” Associate Director at Frontier Economics, Tim Black, said. “Many workers are already on or near the minimum wage, making the impact direct and unavoidable.”
UK retail bosses warned in November that they had “significant concerns” about the impact of the Budget on the retail industry and its knock-on effect “for inflation, employment and investment”.
The BRC estimated that the retail sector will pay an extra £7bn in costs next year, with an additional £2.73bn spent on the minimum wage increase, £2bn on the packaging levy, and £2.33 on higher NICs.
Consumer confidence dips
Shoe Zone, which operates 297 stores and has approximately 2,250 employees, added that it has experienced “very challenging trading conditions” in the latter part of the year, partly due to “weaker consumer confidence”.
Consumer confidence in the economy dipped following the Budget, confirming that households’ optimism in the economy remained relatively depressed throughout the autumn, having improved significantly earlier in the year.
It’s unfortunate timing for a company that was already struggling. Revenue at Shoe Zone fell by 2.7 per cent to reach £161.3m in the year to 28 September, down from £165.7m in 2023.
In March, the company warned that it was trading below expectations due to higher-than-expected costs related to disruption in the Red Sea and slow trading over the autumn season.
The number of Shoe Zone stores in operation has already fallen by 26 during the 2024 financial year to 297.