Shoe Zone Share Discussion Threads

[dmdmdmdm1] 16/1/2020 16:57

Curious about the director change and drop in share price ...sounded positive unless Imisunderstand

[edmundshaw] 16/1/2020 14:51

My feet are wide and shortish, so size is not enough for a good fit most of the time.

But then I would never order shoes online with no physical store available, but would definitely click and collect to try them, or possibly order them online and return to store.

[eeza] 16/1/2020 12:04

Also SHOE benefiting from reduced rents (because of others' CVA's etc)& mooted reduction is Business rates.

[thorpematt] 16/1/2020 11:18

yes, going back to the return rate this is a key point for shoezones business model. As you say clothing online retailers (for all the positives of the trading model) suffer enourmously with returns. It's the most challenging part of it.

Shoes are a little less problematic becsuse the issue of fit is less lileky to be a problem. Often people will order 3 sizes of clothing just to ensure one will fit (and send the other 2 back). They will also order 3 different colours and perhaps 2 slighlty different styles.

Wih shoes the size is usually your size (Pretty much usually fits). In terms of styling and colours it tends to be less of "how does this suit me" than with clothes.

We've all been there where we like the look of a product, try it on and find it just doesn't suit me. Shoes rarely work that way, and dare I say it at the cheaper end of the market it is less likely to be about styling and more about practicalities.

There is also a lot more "it'll do" attitude when you are paying £10 as opposed to £200 (where if you are not 100% happy you send it back).

I also must add here that click and collect and store presence to compliment online is highly useful here. I have felt for a little while now that SHOE is heading towards an almost perfect balance of thse 2 and that reatil, although still in an ever changing evolution, is really not just about online but in fact about combining the benefits of all distribution channels (both on the supply and demand sides).

[someuwin] 16/1/2020 09:02

16 January 2020

Shoe Zone plc

Appointment of Chairman

Shoe Zone plc (the "Group"), the UK's largest value footwear retailer, operating in town centres, retail parks and online, announces the permanent appointment of Charles Smith as Chairman.

Charles is an existing board member and major shareholder of Shoe Zone plc (22.2% shareholding) and was appointed Interim Chairman in August 2019. Prior to that he held the office of Chief Operating Officer since Shoe Zone's IPO in 2014.

Following Charles' appointment, the board composition will be three Executive Directors and three Non-Executive Directors. All Non-Executive Directors serve on both the Audit and Remuneration committees.

[someuwin] 14/1/2020 09:51

Amazing that SHOE's online return rate is only 11%.

That must make them one of the most efficient online clothing operations around (most are about 50% returns).

...And 80% of those returns are direct to stores as well thus reducing costs further.

[someuwin] 13/1/2020 14:15

No online buy quote available.

[owenski] 11/1/2020 08:55

I thought the mark down on results day was unwarranted and so topped up,first purchased recently @138-140. For me it's an income stock so I dont expect massive capital appreciation. The simple question is - is the income sustainable, it looks to be. Plus they have a habit of returning excess capital to shareholders.

Buying before the next div. - in a months time - equates to 11.4% yield over 13 months at current buy price.

[edmundshaw] 10/1/2020 21:46

Underlying the PE is about 10. But with several positive trends (growing and profitable online, reducing rents, Big Box stores clearly going well and the new hybrid format looking exciting too), I find this an easy share to hold at this price. Yield looks sustainable at 11.5p (circa 7%) and in years with special dividends (two out of the last four at 8p) this approaches 12%.

I am cautiously pencilling in a 4p special dividend for next year and improved earnings as a likely median earnings scenario - which would obviously likely be accompanied by an improved share price. But if some of those good metrics add underlying growth to a less difficult year, of course things could get considerably better.

I didn't comment earlier in case the price dropped further. I would have liked a little top-up!

[leoinvestoruk] 10/1/2020 10:10

I was impressed by the results and their conservative approach to their forecasting, and so added on the open. We'll be doing a section on Retail include Shoe Zone on Small Caps Live at 11am today (or catch up later):
hxxps://discordapp.com/invite/vBQjDaZ

[otemple3] 09/1/2020 21:38

Good post Thorpematt. Have some of these in my wife's ISA and happy to sit and receive the dividend and slowly watch it rerate. Think this should be closer to £2

[thorpematt] 09/1/2020 19:53

The PD really is of little concern given its size. The cash pile would comfortably wipe it all out.

The write down in property is prudent and tax-sensible but of no effect to the cash earning power.

Given the underlying ability to spin off close on £10m PBT annually (despite hefty ongoing dividends) it's hard not to see the value of a company which current has an EV of less than £70m; a growing online presence and a 23% drop in rents. The average 2.1 year lease means that these will continue to benefit.

Many will look at the 7% yield and see that this year's cover is deficient but the headline figure misleads against normalised earnings which comoftably allows the Board to be confident in maintaining the dividend througout its investmentment in new stores and formats.

As Fincap noted in their morning note:-
"A refreshed executive team (with the previous CEO returning to the role and the COO moving to the Interim Executive Chairman role – together, they own 50.01% of SHOE), has significantly stepped-up the pace and vigour of executing the operational strategy. Management revitalisation therefore looks an interesting juncture in the SHOE equity story. We believe that the restored positive trading momentum of the last few weeks of FY19 and the encouraging FY20 outlook statement provide evidence to support our view of a reinvigorated focus already delivering benefits."

and as Paul Scott noted in his report yesterday:
"My opinion - of the 2 retailers I've looked at today, Topps Tiles (LON:TPT) and Shoe Zone (LON:SHOE) my view is that SHOE is by far the better bet at the current modest valuation. Its >7% dividend yield looks great, and should be sustainable.

I see the dip in earnings this year for SHOE as probably being a temporary glitch, rather than a more worrisome trend. There's plenty of positive stuff in the narrative today, to imagine that profits should stabilise or recover in future.

[actybod] 08/1/2020 10:12

Agree. Not very inspiring

[johndoe23] 08/1/2020 09:22

Nothing new in the finals that we didn't already know from trading update in October, hence share price flat. Can see this drifting...

[fenners66] 08/1/2020 07:23

"The pension liability has increased by GBP3.4m, from GBP6.3m to GBP9.7m. "

Despite spending £890k to fill the hole.
Devalued property by £2.9m ... and next year by ?

[johndoe23] 02/1/2020 14:52

Final results 8th January...

[dmdmdmdm1] 02/1/2020 10:21

Must almost be time for a trading update?

[edmundshaw] 13/12/2019 09:47

Having added big on the lows, I have sliced a few after a half-decent recovery. Just a touch of prudence. But still overweight.

[thorpematt] 13/12/2019 00:57

This is my biggest holding now, having bought in heavily after the fall and more recently seeing a rise.

I see this particular stock as a buy and hold so unless it reaches a very high valuation I am unlikely to sell down. I rarely say that for most of my stock trades because quite simply put there are not many companies on the index that have high enough quality metrics.

ROE and ROCE in the last trailing 12month are hovering at around 30%, the yield is just shy of 8% and we have net cash. Mid to long term these are fantactic things for owners of such a company.

[edmundshaw] 12/12/2019 14:31

Season's greetings, Andy! :))

[andyj] 12/12/2019 13:58

Having luckily bought in at 1.15 this has been a great Christmas present.

[edmundshaw] 06/12/2019 09:21

Share showing signs of life...

130p was always a knock-down price. If the business recovers well, 2021 final dividend includes a special, the yield will be around 14%!!

Meanwhile, for this year the yield is still over 8%.

The short-term leasing model is, literally, paying dividends...

[1hopefultrader] 25/10/2019 06:43

easy isn't it

[edmundshaw] 24/10/2019 21:42

Yep. It is always possible we might be wrong, but the chances are good here.

Just the fact that another 20 Big Box stores are being pencilled in for next year shows strong confidence in current trading and the business model, in my view. Given the experience of some other high street casualties, it would be madness to build out like this if the projections were not pretty watertight.

[thorpematt] 24/10/2019 19:51

Sometimes the market gets confused. Certainly it appears to be rating SHOE as a simple high street retailer with downward pressure on sales.

In reality the stock just keeps producing very high levels of ROE and ROCE. Despite its high historic yield the company consistently fails to utilse debt to fund its growth or cap-ex requirements.

Despite the requirement to change its offering in recent years (and the increase in cap-ex needed as a result) the FCF has still been excellent.

I rarely double down on stocks I have bought in at a higher price previously, but i made a recent exception for SHOE because quite simply it was an opportunity not to be missed. For me if its rare to see true quality stocks on sale and when one appears it seems wise to snap it up.