Shoe Zone PLC (AIM:SHOE) shares tumbled 16% on Wednesday after the retailer swung to a loss and warned of mounting cost pressures in the months ahead.
The discount footwear chain posted a pre-tax loss of £2.3 million for the six months to 29 March, compared with a £2.6 million profit a year earlier.
Revenue fell 6.5% to £71.5 million as the company traded from a smaller store base. Shoe Zone now operates 278 shops, down 31 on the year, with 21 closures in the first half alone.
While digital sales rose 6.4%, they failed to offset the decline from bricks-and-mortar closures.
The retailer cited subdued consumer confidence and rising costs, including higher national insurance and minimum wage increases from April.
It now expects to spend £6 million refurbishing shops and is targeting a leaner 260-store estate.
Despite the weak first half, Shoe Zone still expects to report £5 million in profit for the full year, albeit down sharply from previous forecasts.