PROFIT growth has stalled at the footwear retailer Schuh, which has seen margins squeezed amid changing fashion trends and tougher trading conditions.
The Livingston-based company warned yesterday of a difficult year ahead, with fewer shoppers visiting its 42-strong network of stores in Britain and Ireland.
According to finance director Mark Crutchley, however, the company's growth programme will continue, following a management buy-out last year which saw the directors take control.
The company is taking stock of the London market after opening its biggest store to date on Oxford Street just over a year ago. Schuh is also scouting further sites in the south and south-east of England, Crutchley added.
Schuh landed the accolade of best private company at the prestigious Scottish plc awards earlier this year, following several years of record profits.
The firm has found the going a little tougher of late. Pre-tax profits dipped 8-per cent to GBP8.3m in the year to March 27, 2005.
Sales continued to climb steeply, following new store openings in Oxford Street, the Metro Centre at Gateshead, Stirling, Crawley in Sussex and Dundrum in Dublin. Turnover rose 20-per cent to GBP97.3m during the period.
Writing in the annual report, chairman Terry Racionzer commented: "Like-for-like sales, in terms of pairs sold, were significantly ahead of the previous year, but the monetary value of those sales has not increased proportionately due to fashion trends dictating a fall in average selling prices."
In other words, fashionfixated teens have been buying cheaper brands, a cyclical phenomenon which will eventually reverse.
Racionzer stressed that no aspect of Schuh's business has been immune from the downward pressure on selling prices and the lull in consumer demand.
Commenting on the first months of 2005-06, he added:
"The new financial year has started slowly with reduced footfall on our high streets right across the country. It will not be an easy year."
No details were given regarding last year's MBO at Schuh, forwhich Lloyds TSB provided debt funding.
Besides Racionzer, the main shareholders before the buyout were Sandy Alexander, who founded the Schuh concept, and Ashleybank Investments, which is owned by David Stevenson, the man who built up Edinburgh Woollen Mill.
Alexander founded Schuh in 1981 and grew the business for some six years before its acquisition by Goldberg, of which Racionzer was a director. The two men teamed up to negotiate the buy-out of the restructured Schuh in 1990.
During 2002-03, Alexander stepped down as managing director in favour of Colin Temple, formerly merchandise director.
FACT FILE
2005 2004
TURNOVER GBP97.3m GBP80.8m
PRE-TAX PROFIT GBP8.3m GBP9m
TOTAL DIVIDEND GBP25,000 GBP201,000
Full-year figures
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