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Shoe Zone (AIM:SHOE) – profit warning and the shares tumble; buying opportunity? 

21/04/2015 · Shoe Zone (SHOE) 

The UK's largest value footwear retailer, issued a disappointing trading update for the six months ending 4 April 2015 which has really whacked the share price. The weather excuse is somewhat unexpected given the Group’s ‘value’ offering, however, management offer an interesting illustration of the problems encountered. This remains a well managed, cash rich business with the founders retaining plenty of skin in the game. With the reduced dividend still well supported by decent cash flow and the Group offering attractive returns on capital it could offer an interesting buying opportunity.     

Blame for the warning was placed firmly on warm weather conditions which had a material impact on autumn/winter trading which slowed revenues in the first half.  While footwear sales volumes increased, the average price was down due to the different product mix sold. Management offered a lovely example of this with, for example, lower priced ladies ankle boots being favoured over long leg boots.

Margins have…

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