Struggling high street chain Shoe Zone blames soaring Iran war costs for losses as it holds Fareham presence

High street retailer Shoe Zone has warned that the ongoing Middle East war is pushing up business costs as it reported widening losses.

The chain, which operates several stores across Hampshire including one outlet in Fareham Shopping Centre, also believes shoppers’ worries are adding to the financial pressures. It runs 259 stores across the UK, but has been shutting shops and is in the process of cutting the size of its warehouse.

It reported a pre-tax loss of £5.3m for the six months to March 28, widening from the £2.3m loss reported the same time last year. Revenues fell by 12 per cent year-on-year to £62.9m, which was partly due to there being 19 fewer stores than the year before after a series of closures. It closed its outlet in Waterlooville in 2023.

Shoe Zone also blamed slower trading on consumers being less confident to spend as a result of the two latest Government budget announcements and, more recently, the war in Iran. This was resulting in fewer visitors to shops and less spending on nonessential items, according to the firm.

Sign up for The Week in Defence with Freddie Webb - our newsletter rounding up the sector’s must-read stories

At the same time, it told investors that the conflict had resulted in higher transportation costs and pushed up the price of containers used for shipping, which it expects to weigh on financial performance for the rest of the year. The retailer said it was now expecting to report an adjusted pre-tax loss of between £1m and £2m for the full year, having previously guided towards a £1m profit.

The conflict and the closure of international shipping waterway the Strait of Hormuz led to a surge in the cost of fuel, which has been impacting a range of businesses who use fuel for manufacturing, transport, or across their supply chains. Last week, sports fashion retailer JD Sports, which is well known for selling trainers, warned over the potential for higher prices and a weakening of consumer demand if costs continue to rise.

Shoe Zone highlighted efforts to relocate and revamp its retail chain into newer and bigger formats which it wants to complete by the end of 2027. At the same time, it said it was in the process of reducing the size of its distribution centre to reflect the fact that it had fewer stores and to “right size” for the future. Shoe Zone shares were down about 3.5 per cent in early trading.