Retailer in talks
Schuh plunges to loss as landlords urged to reduce rents
Stores have seen a downturn in activity
Footwear retailer Schuh plunged to a loss as it continues to negotiate lower rents and presses for action on rates.
The Scotland-based company has already embarked on a big cost-cutting programme and will decide soon on whether to wind up its operations in Germany.
Struggling stores contributed to a loss of £6.1 million from a pre-tax profit in 2018 of £13.1m.
Turnover the year fell from £308.5m to £288.4m despite an increase in online sales “masking a considerable drop in store sales.”
David Gillan-Reid, finance & HR director, said: “We have been faced with an unprecedented number of trading headwinds, including increasing occupancy and staff costs.”
He listed the minimum/living wage, apprenticeship levy, pension auto- enrolment as among the added costs. Brexit uncertainty and political instability, and a fall in consumer spending on footwear and apparel also contributed to lower revenue.
“In addition, product and brand availability with margin pressure given the high dominance of sport brands, an extremely promotional environment and a significant footfall decline on the high street, in shopping centres and retail parks all make for a tough trading period, he said.
We are navigating our way through these demanding times and remain optimistic of our future– David Gillan-Reid, Schuh
“Added to this is the increased cost of doing business online without a corresponding reduction in what are generally fixed store costs, the necessary investment in marketing to keep existing customers and attract new, and the additional cost of a CRM system to comply with GDPR legislation.
“We are navigating our way through these demanding times and remain optimistic of our future, but only with engagement from our landlords and the business working very hard to keep developing our product offer, driving new initiatives in technology, design, etc.”
In September this year schuh engaged retail property consultant, CAPA, with the aim of reducing occupancy costs across the store estate. Genesco, Schuh’s US-listed parent company, has also engaged directly with landlords to seek their support in right-sizing rents.
Nicola Monachello: brought in to oversee buying
In the current (FY20) year Schuh has closed down its three German trading stores. The Schuh German language website continues to trade as part of the UK Company, but a final decision on the winding up of the German entity will take place shortly.
The company recently appointed Nicola Monachello, formerly of New Look, as the new buying director. She will oversee the existing sports, kids, fashion, and Schuh own label buying teams while working closely with key brand partners to redefine and re- engineer the buying strategy.
Mr Gillan-Reid said that despite the challenging environment, “we believe there are opportunities to navigate through this period with support from landlords on store rents, councils with rates help, less focus on a continual heavily promotional environment and, not least, some clarity on the UK’s future relationship with the EU.”