Shoe Zone PLC (LON:SHOE) was on the front foot on Wednesday as the footwear retailer confirmed a special dividend for the year after achieving record pre-tax profit.
Statutory profit before tax rose 18.4% to £11.3mln in the year to 29 September 2018 from £9.5mln a year ago.
READ: Shoe Zone steps higher as it unveils £4mln special dividend
Revenue increased 1.8% to £160.6mln with the company’s Big Box out-of-town stores contributing £7.1mln to sales and online revenues rising 19.9% to £9.8mln.
"This positive performance is a testament to the strength of the core business model and the effective focus on growing the Big Box and digital channels,” chief executive Nick Davis said.
“As a result of the strong performance, the board is pleased to again return excess cash to shareholders by way of special dividend.”
The company proposed a special dividend of 8.0p per share on top of an ordinary dividend of 19.5p, which is up 91.2% on the previous year’s payout.
Shoe Zone said in October that it would distribute an extra £4mln to shareholders in the form of a special dividend after better-than-expected second-half trading.
The group ended the year with a cash balance of £15.7mln, compared to £11.8mln last year.
During the period, the group added 10 Big Box stores and introduced new brands including Wrangler and Crocs.
The company closed 20 Shoe Zone stores and opened 16, ending the year with 492 stores. Total spending on the store estate for refurbishments and openings totalled £5.1mln.
Looking ahead, the group said the outlook for consumer spending remains challenging with the difficult economic conditions likely to continue as Brexit approaches.
However, Shoe Zone said it believes it is well placed to handle tough market conditions and remains “positive about the outlook” for the new financial year.
It said it has made a solid start to the new financial year and is trading ahead of previous market expectations.
finnCap ups estimates, target price
In a note to clients, analysts at ’house’ broker finnCap commented: “Against the backdrop of UK retail sector turmoil and material profit warnings, SHOE stands out as one of the very few retailers continuing to deliver upgrades in highly challenging markets.
“We upgraded forecasts on trading strength in October and do so again today (FY19 PBT increased by +8% to a conservatively framed £11m) on the back of very strong FY18 results, with positive trading momentum continuing so far into FY19.”
They added: “Alongside better-than-expected FY18 results, management has also delivered a step-change in confidence/clarity around SHOE’s strategic growth ambition. This is a significant moment for the SHOE investment case, with SHOE entering into a distinctive new phase of growth which, in turn, should have important positive long-term implications for sentiment, forecasts and valuation.”
The finnCap analysts raised their target price for Shoe Zone shares to 230p “to reflect the opportunity and eye-catching c11% total (incl. special) yield.”
In late afternoon trading, Shoe Zone shares were 11.4% higher at 200p.
-- Adds analyst comment, updates share price --