Shoe Zone Share Discussion Threads

[masurenguy] 08/6/2016 07:24

Profit marginally down by 4.5% but net cash up 37% to £8.1m from £5.9m and no debt. Dividend increased by 3.1%.

RNS Number : 4996A
Shoe Zone PLC
08 June 2016

Interim Results

Shoe Zone plc ("Shoe Zone", the "Company" or the "Group") a leading UK specialist value footwear retailer, is pleased to announce its Interim Results for the six months to 2 April 2016.

Financial Highlights

-- Revenue reduced to £74.6m (2015 H1: £78.2m) reflecting the closure of 23 loss making and temporary stores
-- Product gross margin improved to 61.1% (2015 H1: 60.5%)
-- Profit before tax of £1.91m (2015 H1: £2.0m)
-- Earnings per share decreased to 3.05p (2015 H1: 3.17p)

-- Strong cash conversion maintained with a 37.3% increase in net cash to £8.1m (2015 H1: £5.9m)
-- Increase in the interim dividend to 3.3p per share (2015 H1: 3.2p per share)

Operational Highlights
-- Further store portfolio improvements with 53 Grade 1 stores created in the period
-- Rent on renewals fell on average by 29.9% representing a GBP222k cost saving
-- Rent as a % of turnover is now 14% (2015: 14.7%)

-- Significant infrastructure investment at the Leicester distribution centre including new online fulfilment area resulting in efficiency savings
-- Non-desktop accounted for 70% of online visits to Shoezone.com (2015 H1: 64%)

Anthony Smith, CEO of Shoe Zone plc, said:"We have continued to make good progress with our store portfolio upgrade and rationalisation programme and I am pleased with the performance of the Group in what was another difficult period for the clothing and footwear industry. The Grade 1 format increased by 53 stores in the period and further additions will be made in the second half. We are excited to be launching our "Big Box" format in three locations in August. This will allow Shoe Zone to access the important out of town market, creating a new avenue for growth. We will provide an update on this trial at the Full Year results in January 2017. The Group has traded in line with management's expectations since the period end and the Board continues to look to the future with confidence."

[masurenguy] 05/6/2016 17:19

Very quiet here over the past 3 months with the shareprice remaining in a range of 200 - 210p. However Miton have increased their holding to 14.25% during this period. H1 results are due on Wednesday. Last years interim dividend was 3.2p.

[imranawan] 10/3/2016 13:38

No problems Masurenguy and I appreciate your kind words.

I agree that the move to a larger Grade 1 stores is a real positive for SHOE and should help them grow the top line. I'm just wary of the retail space in general, and think the outlook statement gave them some wiggle room should they not hit forecasts. Part of me selling out was also based on what may happen to the share price should they miss forecasts. Last year they fell from a peak of 260p to 185pn on the day of the PW and then back to their IPO price of 160p.

If they miss forecasts for this year, the market will punish them. Recent IPOs that have disappointed such as ENTU and LAKE have been punished heavily by the market. I had quite a decent chunk of my folio in SHOE, so wanted to reduce risk.

I agree with your points that the current valuation is not demanding and is supported by a nice yield. SHOE is on my w/list and I will buy back in at some point.

I don't have any immediate plans for deploying the cash, as I'm trying to build up my cash levels, given the jittery markets and Brexit looming on the horizon.

Good luck to you and other holders.

[masurenguy] 10/3/2016 13:16

Thanks for such a constructive post summarizing a contrarian view. I too only invested here in June 2015 after last years profit warning. We just arrive at divergent conclusions over future prospects as a result of different interpretations of known facts and credible data projections.

In addition to the points raised in my above post #285, my favourable view of their forward prospects is enhanced by the restructuring of their high street outlets. in the 6 months since the last year end they have increased the number of larger Grade 1 stores by 24% to 287 and this now constitutes roughly half of their total estate. These Grade 1 stores carry a larger product range and historically are twice as profitable as their standard, smaller Grade 1 stores. I see this as positively impacting top line growth this year although we will have to wait until the release their H1 trading update next month in order to be able to quantify this.

Always nice to take a profit and I wish you good luck with your redeployed funds.

[imranawan] 10/3/2016 11:16

I agree Masurenguy with all your points, but recently exited. I take the point about the PER being cheap as well as the EV/R, but I can't see the share price moving until we get a trading update from the Company. Last year they issued a PW in April due to the mild weather.

I thought the outlook statement was rather vague, and after banking the recent divi and special divi I decided to sell up and move on. I still like the company and would revisit if the trading update was in line. One of the other reasons I sold out was due to the EPS forecast being lowered according to Stocko since the FY results in January, this combined with the outlook statement and lack of top-line growth led me to sell out. I initially bought in after the initial profit warning last April, so have held a while.

Good luck to all holders, and I hope the company continues to trade well.

[masurenguy] 10/3/2016 09:23

Final dividend of 6.5p, plus the additional special dividend of 6p, was approved at the AGM last Friday. The shares went XD on Feb 25th and the 12.5p dividend is due to be paid next Wednesday (16/3).

Shareprice has dropped by 11% over the past couple of weeks from 222.5p to the current midprice of 198.5p. Only half of this fall reflects the XD date on 25/2 so the balance would just seem to be price drift. The projected cash position at the end of this financial year is circa £15m so we could see another potential special dividend again in March 17. The latest Numis forecast is for eps in the current year of 17.6p. That puts them on a current PER of 11.25 but when you strip out the projected potential cash of circa 30p per share at the year end, the EV/R is only 9.5. With an historic yield of 4.9%, rising to 7.8% when including the special dividend, the future return here continues to look to be very good.

[masurenguy] 25/2/2016 14:26

A Sell of 1.25m shares at 11.10am this morning. That would have been in the pipeline from the open so it would appear that this may also have been a factor in todays initial price fall. The seller has already qualified for their dividend payout of £156K on these shares, which represents a yield of 6.4% of the shares that he has sold. That transaction represents 2.5% of the issued shares so we might see an RNS identifying the shareholder over the next few days. The shareprice has slightly risen since then.

[masurenguy] 25/2/2016 10:55

Well 12.5p of the 17.5p fall reflects the dividend. A few very small PI sellers are probably taking profits following the recent rise after qualifying for the dividend today.

[gargleblaster] 25/2/2016 10:38

Just realised - ex-div today - but does not fully explain fall (as usual on low vols).

[masurenguy] 25/2/2016 10:19

An 8% fall on going XD and after just a dozen small Sells with a total volume of less than 30,000! The current drop of 17.5p comes after the qualification for the dividend of 12.5p today. The shareprice can just as easily fall, as rise, on miniscule volumes. That is just another characteristic of a closely held, fairly illiquid, AIM stock.

[sphere25] 25/2/2016 10:13

Ex-dividend today folks.

Alot of people panic selling for no reason.

From the results

"Dividends

As a result of our performance in the year and strong cash position, the Board is proposing two dividends to be paid being a final dividend of 6.5 pence per share, resulting in a total dividend for the year of 9.7p per share and a special dividend of 6.0 pence per share.

The board is proposing a special dividend in order to distribute surplus cash generated from our strong cash conversion. We believe that GBP11m is currently the maximum level of cash that the business requires to operate effectively and so excess above this level will be paid to shareholders by way of a special dividend when appropriate. Therefore, the special dividend of GBP3m, being 6.0 pence per share is being proposed.

The dividends will be paid to shareholders on the register on 26 February 2016, payable on 16 March 2016 if approved at the Annual General Meeting to be held on 4 March 2016. The shares will be ex-dividend on 25 February 2016."

[gargleblaster] 25/2/2016 10:08

But taking a shoeing today!

[gargleblaster] 22/2/2016 13:49

I'll take it!

[masurenguy] 22/2/2016 11:30

The rise continues on very miniscule trading volumes !

[masurenguy] 18/2/2016 13:38

There is the highest daily trading volume over the past 3 weeks already today and the shareprice is heading north. This morning the price has moved up to a 10 month high

[sphere25] 29/1/2016 11:16

Moving beautifully - UP UP UP UP

Up 19% with juicy dividends to come.

------------------------------------------------------------------------------
Sphere25
13 Jan'16 - 08:21 - 258 of 274 0 0 edit

Fallen from 215 to around 165 on expectations of a warning, yet SHOE have confirmed despite the (well documented) issues on the high street, the year gone has finished in line with expectations, and the new year is going to plan too.

So many positives:

- Store portfolio management: "opportunities to reduce rents and relocate to better sites and therefore continue to open larger, more profitable Grade 1 stores"

- overall e-commerce growth was significantly ahead of e-commerce market expectations

- merchandise director will continue to improve our stock and cash position

- The falling oil price is already having a positive impact on the cost of logistics and should also impact the price of raw materials thereby improving gross margins for the remainder of the year.

A few other bits and bobs in there, not to mention the special dividend, on top of a healthy normal dividend.

EPS of about 19p for current financial year so trading on a single digit pe. The expected 11.25 dividend would yield 5% at 220, that's without any more special dividends.

Is this the most exciting business out there - of course not, and we'll have to see how trading progresses through the year, but it really does look like the market has overreacted a great deal here.

I've been buying this morning. This is worth well north of £2 imo.

[topvest] 23/1/2016 21:19

Why are all the shoe shops based in Leicester...SHOE ZONE, Brantano, A Jones & Sons....?

From the 2014 accounts, both Brantano and Jones were on their last legs and had a disclaimer of audit opinion by EY.

Both are nowhere near as good a business as SHOE ZONE with its 60%+ gross margins. Their margins were 50% or so. Makes all the difference on a retail operation.

[masurenguy] 22/1/2016 09:59

The two current broker recommendations are both BUY, with shareprice targets of 223p and 210p respectively. This provides an average target price of 217p, representing an uplift of circa 14% above todays midprice of 191p.

[masurenguy] 22/1/2016 08:09

I think that the Smith brothers have clearly established a sufficient track record to demonstrate that they know what they are doing when it comes to opening and closing retail sites so I doubt that anything that they may decide to buy from the administrators is likely to "cause them problems". As topvest has indicated above - if Brantano don't re-emerge out of administration and continue trading under new ownership then there should be some incremental business available to Shoe Zone.

However, it is all entirely speculative until we see the final outcome of the Brantano administration.

[clocktower] 22/1/2016 07:54

Alteri will have picked off all they wanted as they have Jones and know the score and utilised anything of value and left nothing of real value to Show Zone imo.If they pick up anything it may well cause them problems.

[topvest] 22/1/2016 07:50

Yes, has to be a great opportunity for Shoe Zone to pick off some of the better stores and convert. Even if they are not suitable then less competition for existing Shoe Zone stores.

[masurenguy] 22/1/2016 00:03

Good spot - here is the article. If they do not re-emerge from administration then Shoe Zone might pickup some of the slack and maybe a few stores too.

Brantano UK Collapses With 2,000 Jobs At Risk

The value shoe retailer Brantano UK has gone into administration leaving 2,000 jobs at risk, just three months after it was bought by a specialist retail investor. Administrator PwC said Brantano's website and store network would continue to trade as normal for now. The firm, based in Coalville in Leicestershire, operates 140 stores and 60 concessions across the UK and is the only major retail casualty of the festive season to date.

Brantano was bought by Alteri Investors last October but PwC said it had "experienced difficult trading conditions" and it was placed in administration "despite sustained efforts to make the business more commercially viable". The administrator added that Jones Bootmaker, also bought from the Dutch-based Macintosh Retail Group in the same deal, was not affected by Brantano's collapse.

Tony Barrell, the lead administrator, said: "The continuing challenging conditions for ‘bricks and mortar’ retail stores are well documented. "Like many others, Brantano has been hit hard by the change in consumers’ shopping habits and the evolution of the UK retail environment. The administrators are continuing to trade the businesses as normal whilst we assess the trading strategy over the coming days and weeks. Staff will be paid their arrears of wages and salaries, and will continue to be paid for their work during the administration."

Robert Moran, who is leading the sales process, appeared hopeful of a buyer being found. He said: "Brantano is an established value shoe retailer in the UK and Jones Bootmaker/Brantano businesses attracted considerable interest during the 2015 sales process. We are now assessing interest in the UK Brantano business as a whole or its parts and we welcome approaches from interested parties."

Navindya Sharma, clothing and footwear analyst at Verdict Research, told Sky News the announcement had come as a real surprise. "I did not expect them to go into administration. There must have been some plan before they (Alteri) went in for the business. Alteri might want to invest in Jones and some jobs may go there or they might want to introduce a new brand. It is too early to say. But Brantano had been in trouble for some time already. Their proposition had no differentiating factor."

Brantano is not alone in having endured tough trading - particularly over the Christmas season which is crucial for any retailer. A wet December hit visits to high streets and warmer-than-average temperatures damaged demand for winter fashions, especially coats, with stores facing another fierce battle for business with online rivals. The value sector, including pound stores, has tended to outperform since the recession though supermarkets enjoyed a return to fortunes over Christmas, with customers returning from discounters as higher employment and salaries helped line pockets.

[ayl30] 21/1/2016 17:56

uk.finance.yahoo.com/news/brantano-uk-collapses-2-000-155517871.html

Brantano bust!

[davebowler] 13/1/2016 11:48

Finncap;
While FY 2015 results were exactly in line with our expectations, weak Q1 2016 trading means our current FY 2016 EPS forecast has 5% downside risk. That said, the 11% drop in the price over the past week seems overdone to us, and we expect positive investor sentiment around the special dividend (total FY 2015 yield of 9.4%) and potential for higher capital return in future. We trim our PT from 236p to 223p but retain our Buy recommendation.

[topvest] 13/1/2016 11:27

It says to me LfL sales are down, but margins strong and working capital control good. Progress against strategic objectives is a different point entirely. Suggests current year forecasts will be lowered a tad on the back of this, but that's to be expected given the weather patterns. Hopefully we will get a write-up from Paul Scott shortly as he has covered this stock and he likes retailers.