Shoe Zone Investors - SHOE

Shoe Zone Investors - SHOE

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Stock Name Stock Symbol Market Stock Type Stock ISIN Stock Description
Shoe Zone Plc SHOE London Ordinary Share GB00BLTVCF91 ORD 1P
  Price Change Price Change % Stock Price Last Trade
0.00 0.0% 57.50 08:00:02
Open Price Low Price High Price Close Price Previous Close
57.50 57.50 59.00 57.50 57.50
more quote information »
Industry Sector

Top Investor Posts

leedslad001: That's what we want investors not traders
boonkoh: Revenue hit in Nov lockdown was a known event already IMO. Sneaky to put in a trading update in an RNS titled full year results date. Investor relations person should be fired.Nevertheless, still trading at very low revenue multiples and potentially 5-7x FCF for next year IMO. Bargain. I personally think fair value for SHOE is 98p, so almost 100% upside from the current price.
boonkoh: Took a while but investors are twigging on that this traded at 180p+ pre covid!Obviously not getting back to that same level. High Street footfall will still be permanently down when it recovers, and it's strong balance sheet is less strong now. But no reason why 100p isn't achievable IMO.Only threat is Clarks just came out of CVA. Not closing any stores unfortunately, and they're moving to turnover based rents. So they'll have less rent cost than Shoe per store. The good news is that Shoe average lease length was less than 2 years at the start of this year, so 25% stores could be exited by end of 2020, another 25% by end of 2021, and they've already secured some rent reductions.Business rates cliff in March is the next thing to look out for IMO.
mctmct: Coronavirus: concerns about supplies spooking investors? Should they be?
someuwin: finnCap... Shoe Zone (SHOE): Corp Early signs of restored positive trading momentum Today's FY19 pre-close trading statement should be well-received by investors on multiple levels and therefore serve as the basis of a valuation re-rating: (1) we believe SHOE has delivered on recently downgraded PBT expectations of £9.5m, an important staging post in rebuilding investor confidence; (2) SHOE's strong cash conversion delivered FY19 net cash of £11.3m (FY18: £15.7m), well ahead of our recently downgraded expectations of £9m; and (3) underpinned by the continued growth of the successful Big Box roll-out combined with "strong Digital momentum", early signs of SHOE's return to positive trading performance, after a tough summer, are a cause for optimism. FY19 results on 8 January should provide additional quantification of current progress.
masurenguy: Edmund - totally agree with your sentiments in #437 above. I've been invested here for 31 months and, although the current shareprice is just a few pence below my current average cost (163p), I've already had 44p in dividends during that period, which in itself represents a 27% return on my investment over that timeframe and an average of 10.4% per annum. I think that if the Big Box concept is working well then they may deviate from their flexible store operation model for that particular set up. That obviously remains to be seen but however they treat that going forward I can't see them making any changes to their regular store strategy. This gives them an advantage against competitors like Deichmann who have much nicer, larger and permanent store locations but therefore have greater overheads and less flexibility in any downturn. I'm also very comfortable with their balance sheet, cash position and the transparency and consistency in their trading updates and subsequent results. I also like the fact that the Smith brothers still retain 50% ownership here and that their interests also seem to be aligned with the other shareholders. I've updated the current major shareholders in the header. It is interesting to note that the top 5 institutional investors hold 38% so the current free float is only 12%, which of course means that the shareprice can move on quite small trading volumes.
masurenguy: Paul Scott has posted a very favourable view of the Shoe Zone results. Shoe Zone (LON:SHOE) Share price: 160p (down 1.2% at market close) No. shares: 50.0m Market cap: £80.0m Revenue fell 1.3% to £157.8m. This fall reflects net store closures. Unfortunately, the company doesn't seem to disclose its LFL sales performance, which is a pity. Loss making stores now make up only 6% of the Shoe Zone portfolio, having been 11% three years ago. Overall store numbers reduced by a net 14 branches to 496 at the year-end (2016: 25 branches closed leaving a total of 510). The flexible store portfolio, and short leases, is a key strength of this business. Also, the low capex required to fit-out a shoe shop is another advantage. Therefore SHOE doesn't get lumbered with problem, loss-making shops - it can exit from them very easily - a big advantage. The company should therefore be a beneficiary of falling High Street rents in many towns, in a way that many other retailers will not benefit (due to them having longer leases, with upward-only rent reviews). Short leases are absolutely critical at the moment, for retailers to maintain their profitability. It is targeting 20 new stores in 2018 - 10 of which are the new "Big box" warehouse format. Gross margin is very strong, at 63.2% (up from 62.0% last year). This compares favourably with most fashion retailers, which tend to achieve a gross margin of around 55%. This is achieved by direct sourcing product from China, and I imagine that stock loss (i.e. theft by customers & staff) would be lower for footwear than for clothing. I'm very impressed that the amount of stock sold at markdown prices is only 7.6%. This figure is not normally disclosed by retailers, but in the fashion world it is generally much higher than this. So ShoeZone is clearly pricing its product competitively, with customers happy to buy at full price. Profit before tax fell 8% to £9.5m. The company says this is primarily due to the adverse impact of foreign exchange on imported goods into the UK. That doesn't make sense to me. I would have expected higher cost of imported goods to flow through into a lower gross margin. In this case gross margin is higher, but it seems that some product cost has gone through administration expenses, which sounds peculiar to me. Maybe the gross margin actually fell, if forex losses had been put through cost of sales? EPS fell by 6.5% to 15.8p. This gives a PER of 10.1, which seems about right to me. It's cheap, but that's because earnings have fallen. Dividends - a final divi of 6.8p is flat against last year. The interim divi was 3.4p (paid in Aug 2017), giving total divis of 10.2p, a attractive yield of 6.4%. The divi income is the main reason for holding this share. Note that shareholders were also paid special divis of 6p in Mar 2016, and 8p in Mar 2017. It sounds like there won't be a special divi in 2018. The board remains committed to delivering positive dividend growth to shareholders. In recent years, the strategy has been to pay out around 60% of post-tax earnings as a normal dividend and any surplus cash above £11m as a special dividend. For the year ended 30 September 2017, the board is proposing to pay out 65% of post-tax earnings as a normal dividend. The £0.8m surplus cash over and above the £11m that is required for the business to operate effectively will be reinvested in the business. This results in a final dividend of 6.8p per share (2016: 6.8p), giving a total dividend for the year of 10.2p (2016: 10.1p) per share. This is a model of clarity, so well done to the company on that. It is managing investor expectations very well, and generally I find its accounts & narrative crystal clear. Excellent stuff - if only all companies could do things this way! Mind you, ShoeZone is a simple, and cash generative business, so they have nothing to hide. ecommerce - revenue rose a creditable 34%, and this contributed £2m towards profits in 2017 (before central overheads). So this is becoming significant to profits, although it's only 5.3% of total revenues, at £8.3m. I would like to see this growing faster, which might then drive a future re-rating in the share price, perhaps? Outlook Sounds alright. Shoe Zone has made a solid start to the year and trading is in line with expectations. We are making good progress against our strategic objectives and the board remains positive about the outlook for the Group for the remainder of the year. This is despite mentioning "challenging" & "difficult" economic conditions. Although being at the value end of the market, SHOE should prove more resilient than others, if consumer spending does fall. Balance sheet - is strong.. NTAV is £31.2m - very healthy for the size of company. Working capital - looks good, with a current ratio of a healthy 1.67 (for retailers, which don't have much in the way of debtors, anything over about 1.0 is normally fine). Net cash is £11.8m Pension deficit has come down sharply, from £13.1m to £7.1m, reflecting higher bond yields. It might well be worth looking at companies with pension deficits now, as the trend should now be downwards, due to interest rates starting to move up. Cashflow is excellent, with £13.9m cash generated from operations, flat against last year. Capex rose by 61% to £5.1m, reflecting the cost of new stores. The big box stores must cost a lot more to fit out than regular stores. Dividends of £9.1m were paid out, which was not covered fully by cash generated (after capex), so the cash balance fell from £15.0m to £11.8m. Not a concern, but worth noting. My opinion - as you've probably gathered from the above, I like this company. The figures are simple, and easy to understand. It is decently cash generative, and above all has a very flexible store portfolio with short leases. So it can adapt to market conditions and has only a short tail of loss-making shops. We're in a bull market, where people are chasing growth companies. So this has left behind a lot of value shares like this. Therefore there might only be very limited upside on the share price? So this share is more of interest to long-term shareholders, seeking a reliable high dividend stream. The divi yield here is excellent, at 6.4%, and that looks sustainable to me - due to being reasonably well covered by earnings, and the company having a strong balance sheet with net cash. Plus shareholders get special divis every now & then (but don't expect anything in 2018). Overall then, for income seekers, I think this share could be an attractive option. As always that's subject to you doing your own due diligence on the share. I'm not recommending anything here, just giving my personal opinions - which are sometimes right, and sometimes wrong. Stockopedia also looks favourably on this share, with a decent StockRank (80). I always like to sense-check my own research & view, by having a look at the StockRank - it's an excellent way to make sure I haven't got the wrong end of the stick. I visualise the StockRank as having a Warren Buffett type figure leaning over my shoulder, pointing at the screen saying, "Be careful here, have you thought about xyz, etc"!
masurenguy: Higher risk, but higher reward? For more risk-hungry investors, discount retailer Shoe Zone may present an intriguing option. The company’s shares are currently valued at just 9.8 times forward earnings and last year’s regular dividend of 10.1p represents a whopping 6.4% yield. In addition to the regular dividend there was also a special dividend of 8p that management intends to repeat whenever year-end cash balances exceed £11m. The risky part of investing in Shoe Zone is that aside from facing the same sector-wide challenges as other retailers, the company is executing a strategy of shrinking to grow profits. This involves closing small, low-margin stores and opening up a smaller number of big box stores that cut down on rental, staffing and logistics costs. On top of this, management is also pushing to increase margins by directly sourcing product straight from overseas factories. In the half to April the year-end store count fell from 518 to 504 y/y as part of this plan as the company closed small and medium-sized stores to trial new big-box outlets that are trading very well and will be rolled out across the estate. However, this did lead revenue to fall from £74.6m to £72.9m y/y although gross margins improved a full 170 basis points to 62.8%. During this period the weak pound did cause underlying pre-tax profits to fall from £1.7m to £1.3m y/y but analysts still expect full-year earnings to more than cover dividends payouts. Shoe Zone is a risky income option but yield-starved investors who aren’t risk-averse may find it worth digging into.
bookwormrobert: Hi Linton5! Many thanks for a really good tip about CRST. You might like to google "Ogden Rate change" and think about what effect it will have on DLG. It might be time to sell that one. As for SHOE, it's just such a good income share. I think the reason it is so cheap right now might be due to a lot of the private investor websites underreporting the dividend yield (e.g. by excluding the special dividend).
masurenguy: 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.
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