Shares in Shoe Zone (LON:SHOE) rallied after the budget footwear retailer said positive trading continued throughout July.
Alongside strong inventory and cost control, this helped drive further outperformance in terms of cash generation.
Leicester-based Shoe Zone said it will return excess capital to shareholders through a £3.5 million share buyback, sending the stock higher in early dealings.
Shoe Zone launches £3.5 million buyback
In a short-but-sweet trading update, the shoes, boots and slippers seller announced that trading ‘continued positively throughout July’.
As a result of this, cash and equivalents as at 25 July 2026 ‘stood at approximately £7 million ahead of original budget’, said Shoe Zone.
Drawing confidence from this better-than-expected cash generation, the high street retailer has launched a £3.5 million buyback. This buyback will boost earnings per share for ongoing shareholders.
Sticking to upgraded guidance
For the year ending 3 October 2026, hard-pressed Shoe Zone still expects to post an adjusted loss before tax of ‘no greater than £1 million’.
That is in line with the upgraded guidance provided in a positive update last month.
| FY26E | FY27E | |
| Revenue (£m) | 143 | 143 |
| Pre-tax profit (£m) | (0.5) | 0.5 |
| Net cash (£m) | 11.4 | 14.2 |
Source: Zeus Capital
Back in April, Shoe Zone was guiding for losses in the £1 million to £2 million range. However, sales were ahead of expectations in May and June, aided by the company’s warehouse closing down sale and favourable half-term weather.
Shoe Zone has a good track record of generating cash and returning excess capital to shareholders. We are pleased to see trading picking up after a challenging few years for the business, which looks well-set for the important back-to-school season.
Zeus Capital sees Shoe Zone as ‘fundamentally undervalued given its historic track record of shareholder returns’. The broker also forecasts bumper FY26 year-end net cash of £11.4 million, which should help Shoe Zone to weather the current retail storm.
On balance, we would wait for a return to profitability before buying into the turnaround. Consumer confidence is weak, costs remain elevated and Shoe Zone should be doing better during a cost-of-living crisis. And the punishing profit warnings delivered in recent periods remain fresh in our memory. Avoid for now.
