Shoe Zone said currency headwinds impacted statutory EPS. finnCap downgraded forecasts & TP

Companies: Shoe Zone PLC

Shares in Shoe Zone fell 5% this morning following disappointing half-year results that showed marginally lower revenue year-on-year, and a collapse in pre-tax profits to just £0.3m.

Total revenues decreased 2.2% in the year, which Shoe Zone said was due to its rationalisation strategy for its retail store estate, resulting in an underlying pre-tax profit of £1.3m and a statutory PBT of £0.3m.

Despite the fall in EPS to just 0.50p, the firm still raised its interim dividend to 3.4p per share, up 3% on last year's payout. 

Broker finnCap downgraded its FY17E PBT and EPS forecasts by 5% and 6% respectively following the news, saying the disappointing half-year had left the firm with much to do in its second-half to meet previous forecasts.

"We now forecast 3-year adj. EPS CAGR of -0.2%. With sentiment having been supported by high yield expectations, diminishing prospects for a special dividend this year could put the share price on the back foot. We reduce our price target by 10% to 170p."

CEO Nick Davis said he was pleased with the performance, as he cited the Brexit-induced fall in the value of Sterling as having impacted the Group's statutory profits. He added that trading since the end of the period had been positive:


"The Group has traded broadly in line with management's expectations since the period end and the Board continues to look to the future with confidence."

The information contained within this post is based on personal experience and opinion and should not be considered as a recommendation to trade nor financial advice.