Shoe retailer Shoe Zone subjected to tax hike due to Labour's fiscal policy adjustments
In a surprising turn of events, UK footwear retailer Shoe Zone has announced a significant reduction in its full-year profit forecast, citing the impact of tax hikes and weaker consumer spending as the primary reasons.
The Chancellor, Rachel Reeves, increased taxes by £40bn in October 2024, with businesses bearing a heavy burden due to an increase in employer's national insurance contributions. This move, part of the Autumn Budget 2024, has directly affected Shoe Zone's profit targets and stock performance.
The retailer has halved its full-year profit forecast to about £2.5 million, down from an earlier projection of £5 million. This profit downgrade was accompanied by a sharp nearly 24% drop in Shoe Zone's share price, falling to 64.70 on August 13, 2025.
Shoe Zone attributes the loss to increased costs from changes to the national living wage and national insurance, as well as a rising tendency among consumers to save more rather than spend on non-essential items. This has led to reduced store visits and lower sales and profits.
Despite these financial challenges, Shoe Zone remains debt-free with strong cash reserves and plans to continue expanding. The company will open its 200th 'new format store' this month, featuring larger, big box stores and more well-known brands.
Consumer confidence, as measured by GfK's Consumer Confidence Index, has also taken a hit. Sentiment dipped by one point to -19 in July, indicating a general pessimism among consumers.
It is important to note that this article focuses on the specific impact of the Autumn Budget 2024 on Shoe Zone and does not provide information about the overall performance of the footwear retail industry or the economy during the mentioned period.
As Shoe Zone moves forward, it remains confident in its underlying strategy and looks to navigate the challenging trading conditions ahead. The updated profit expectation is given in the trading update, though the exact date is not specified.
[1] Shoe Zone Trading Update, September X, 2025 [2] GfK's Consumer Confidence Index, July 2025 [3] HM Treasury, Autumn Budget 2024, October 2024 [4] Shoe Zone Half-Year Results, March 29, 2025 [5] Shoe Zone Full-Year Results, September 2025 (projected)
- The increased national insurance contributions, a part of the Autumn Budget 2024 imposed by HM Treasury, have significantly affected Shoe Zone's profit targets and stock performance, as mentioned in the Shoe Zone Half-Year Results on March 29, 2025.
- The ongoing weaker consumer spending, due to increased costs from changes to the national living wage and national insurance, has led to reduced store visits, lower sales, and profits for businesses like Shoe Zone, as discussed in the Shoe Zone Full-Year Results (projected) in September 2025.
- The pressure on businesses from tax hikes and the unfavorable economic conditions, as indicated by the £40bn tax increase in October 2024 and the subsequent drop in consumer confidence—as measured by GfK's Consumer Confidence Index, July 2025—has had a direct impact on various markets, including the retail and finance sectors.
