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Shoe Zone: Retailer warns 100 shops could close

Shoe Zone has warned that it could be forced to close a fifth of its stores if business rates do not change.

The retailer will close 100 of its UK stores unless the property tax is overhauled.

Boss Anthony Smith told the BBC: “If people want vibrant High Streets, they really do need retailers like us to keep our shops open in smaller towns.”

Retailers have called on HM Treasury to reform business rates in the Budget scheduled for next month.

Business rates are similar to council tax for business properties. They are paid by businesses, or landlords if a property is empty.

Mr Smith told Wake Up to Money that although rents had fallen across its 500 shops, the amount it pays in business rates had increased from 26% to 54% over the last 10 years.

Shoe Zone blames Rachel Reeves’ budget for closing stores

High Street retailer Shoe Zone said it has shut stores in response to soaring wage costs following the recent Budget measures.

The group – which employs around 2,250 staff across 297 stores in the UK – said the Chancellor’s move to increase employers’ national insurance contributions and increase the minimum wage has led to “significant additional costs”.

“These additional costs have resulted in the planned closure of a number of stores that have now become unviable,” it said.

The firm declined to comment further and did not provide any details on how many stores had shut or the number of workers affected.

It is understood that the extra costs it is facing from the Budget announcements is seeing it accelerate plans already in place to overhaul its store estate.

UK footwear chain Shoe Zone blames Budget for shop closures

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British footwear chain Shoe Zone has blamed extra costs arising from the recent UK Budget for its decision to shut shops as it warned on profits and suspended its dividend, sending shares in the company down almost 40 per cent. The Aim-listed group, which has 297 outlets and employs about 2,250 staff across the country, said in an unscheduled update to investors on Wednesday that additional costs relating to increases in employers’ national insurance and the national living wage “have resulted in the planned closure of a number of stores that have now become unviable”. It said it has been facing “very challenging conditions” and weaker consumer confidence since chancellor Rachel Reeves unveiled the changes in October. Shoe Zone now expected adjusted profit before tax to be at least £5mn for the year to September 27 2025, down from previous expectations of £10mn. It would not pay a final dividend for 2024, it added. The shares closed down in London trading by 39.1 per cent, to 84.2p, giving it a market capitalisation of about £40mn. Nick Bubb, an independent retail analyst, said Shoe Zone’s profit warning “could rattle a few nerves in the sector”. UK retailers last month collectively warned of annual costs of up to £7bn following the Budget, as well as job losses, shop closures and higher prices. Large employers such as Tesco, Next and Marks and Spencer all signed a letter to the Chancellor saying that “the effect will be to increase inflation, slow pay growth, cause shop closures, and reduce jobs, especially at the entry level”. However, Russ Mould, investment director at AJ Bell, wrote in a note that “Shoe Zone putting the blame for a major profit warning on the Budget seems a poor fit” as consumer confidence has ticked up in recent weeks since the Budget. He added: “Poor autumn weather won’t have helped but Shoe Zone does not sell a discretionary product — it sells affordable footwear, for which demand should be relatively resilient. “Perhaps Shoe Zone’s offering isn’t resonating with shoppers as much as it used to.” The Treasury has previously said: “With our public services crumbling and a £22bn fiscal black hole we had to make difficult choices to fix the foundations of thecountry and restore desperately needed economic stability. This was a once in a parliament budget to wipe the slate clean.”

Shoe Zone halves profit forecast on challenging trade conditions

The company attributes this to a dip in consumer spending and atypical weather patterns that have adversely affected sales and earnings. 

UK Chancellor Rachel Reeves has declared a hike in employer National Insurance contributions from 13.8% to 15%, effective from April of the following year. Additionally, the salary threshold for when this tax kicks in has been reduced from £9,100 to £5,000. 

Post the government’s budget announcement in October 2024, consumer spending has further declined.  

UK retailers, including H&M and Amazon, warned the budget could raise costs by £7bn. A discussion paper was also released on 30 October which recognised the need to ease burdens on the retail and hospitality sectors. 

This budget also means Shoe Zone will face higher expenses due to increased National Insurance contributions and a raised National Minimum Wage.  

These heightened costs have led Shoe Zone to decide to shut down several outlets that are no longer financially sustainable. This situation is expected to considerably affect the company’s annual financial performance, with shares experiencing a 40% drop

Are all Shoe Zone stores closing?

It has been reported that a high number of the shops will be permanently shut, with the full list to be announced in the near future.

No time frame has been put on the full list, and workers are now in a sort of limbo of not knowing whether they will have a job in the new year. It is not known if all stores will close down.

Which ones are definitely closing down?

No definitive list has been announced but it is reported that spots thought to be headed for closure in London include Wembley, Holloway and Harrow, and nationwide hotspots to be affected include Leeds, York, Newcastle and Sheffield. It seems none of the stores are safe, and bosses are assessing all of their locations before providing notice of permanent closures

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