Major high street retailer expected to suffer losses of more than £1m as bosses blame Rachel Reeves's tax raids

Joe Sledge
Wed, 22 Apr 2026 09:08:57 +0000

Shoe Zone has warned it expects to swing to an annual loss of between £1million and £2million for the financial year ending October 3, 2026.

The Leicester-based footwear retailer had previously guided investors towards a £1million pre-tax profit.

Shares in the AIM-listed company fell by more than 22 per cent during Wednesday morning trading.

The high street chain, which operates 259 stores and employs more than 2,000 people across Britain, said the downgrade reflects a combination of geopolitical disruption and domestic economic pressures.

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"These macroeconomic factors have increased customer caution, leading to lower footfall, less discretionary spend and additional costs such as container prices and transportation costs, with a resultant reduction in revenue and profit," the company said.

Shoe Zone said the Iran conflict and Chancellor Rachel Reeves's fiscal policies have contributed to the deterioration in trading conditions.

The retailer described first-quarter performance as "challenging", citing "a continued weakening in consumer confidence, following on from the Government's last two budget announcements, and the geo-political issues in the Middle East".

The ongoing conflict has disrupted global supply chains, with the blockage of the Strait of Hormuz contributing to higher energy and shipping costs for retailers reliant on overseas manufacturing.

Container and transportation costs have increased, adding pressure to margins.

Consumer spending on non-essential goods has fallen by 6.7 per cent compared with the end of last year, reflecting increased caution among households.

Shoe Zone reported pre-tax profits fell from £10million to £3.3million in the year to last September.

Store sales declined by 10.3 per cent over the same period.

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The company closed 28 stores on a net basis during that time.

Shoe Zone said Government policies have been "highly adverse", adding that they have affected both consumer demand and operating costs.

Founded in 1917, the retailer operates 53 smaller high street outlets alongside 206 larger format stores.

The business sells around 13.3 million pairs of shoes each year, with an average selling price of about £13.

Increases to the living wage have added to cost pressures.

Shoe Zone said it is not alone in experiencing weaker trading conditions.

Primark said on Tuesday that April trading had weakened as tensions in the Middle East affected consumer sentiment.

Despite the outlook, Shoe Zone said its balance sheet remains strong.

The company has no debt and reported a cash position at the end of March above the level recorded at the close of the previous financial year.

Shoe Zone expects trading conditions and cost pressures to continue through the second half of 2026.

The retailer will publish interim results in early May, which are expected to provide further detail on performance.