Shoe Zone forced to close stores after 'significant' Budget tax hikes

Shoe Zone has announced the closure of several stores due to increased costs highlighted in the Autumn budget. The value footwear retailer whose head office is in Leicester, cited a combination of diminished consumer confidence post-budget and "significant additional costs" from hikes in National Insurance and the National Living Wage, rendering some outlets "unviable".

This news marks one of the first direct impacts attributed to the budget, as reported by City AM.

Analysts had predicted that the budget would disproportionately affect sectors like retail and construction, which are labour-intensive. "In retail and hospitality, the challenge is especially tough... These are low-margin sectors, so there’s no real room to absorb higher costs," commented Tim Black, Associate Director at Frontier Economics.

He noted that many workers in these industries earn wages close to the minimum, making the cost increases immediate and inescapable.

In November, UK retail leaders expressed "significant concerns" regarding the budget's repercussions for the retail sector, foreseeing consequences for inflation, employment, and investment. The British Retail Consortium (BRC) estimated an additional £7bn in expenses for the retail industry next year, including around £2.73bn for the minimum wage rise, £2bn for the new packaging levy, and £2.33bn due to increased National Insurance contributions.

The report concludes with a note on dipping consumer confidence.

Shoe Zone, with its 297 outlets and a workforce of around 2,250, has indicated it faced "very challenging trading conditions" towards the end of the year, attributing this in part to "weaker consumer confidence". Following the Budget, consumer confidence took a hit, reinforcing the view that household optimism about the economy remained subdued through autumn after having seen a significant rise earlier in the year.

This comes at a particularly bad time for Shoe Zone, which was already experiencing difficulties. The company's revenue dropped by 2.7% to £161.3 million for the year ending 28 September, a decrease from £165.7 million in 2023.