The chief executive of value footwear retailer Shoe Zone, Nick Davies, has resigned from his position with immediate effect, on the same day the company issued a warning that profits will be below expectations.
The company revealed that trading conditions since the group’s interim results on 21 May 2019 “have been challenging” and as a result, its board now expects to deliver a full-year performance below its expectations.
It said that whilst its big box and digital growth elements of the group’s strategy are “progressing strongly”, in the short term, its performance has been offset by the “tough high street trading environment”.
The board added it has also undertaken a review of its freehold property valuations and has concluded that it will be writing down the value of its 17 freehold properties by £3.1m to £5.3m. This will result in a non-cash exceptional charge in its full-year results for the year ending 5 October 2019.
Shoe Zone expects the write down to have no effect on the group’s upcoming dividend, which will be calculated on the basis of the underlying trading performance. The company’s board will provide a more detailed update at the time of its Full Year trading update on 24 October 2019.
Following Davies’ departure Shoe Zone said that Anthony Smith, current executive chairman, will resume his role as CEO on a permanent basis. Charles Smith, COO, will assume the role of interim executive chairman and Jonathan Fearn will continue as CFO.
Anthony Smith, chief executive of Shoe Zone, said: “I would like to take this opportunity, on behalf of the board, to thank Nick for all of his work since he joined the business in 2003. Nick was instrumental in getting Shoe Zone ready for the public markets in May 2014 and was promoted from CFO to CEO in June 2016. The Board wishes him well in his future endeavours.
“As has been widely publicised, the UK High Street is currently facing a challenging environment in which to operate. The pressure on the retail property market has enabled Shoe Zone to achieve an average 23.5% fall in rents on renewal and average outstanding lease length of only two years.”
He added: “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.
“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.”