Shoe Zone Intrinsic Value – SHOE ZONE Reports Second Quarter Earnings for FY2023, Ending May 16 2023.
May 27, 2023
Earnings Overview
SHOE ZONE ($LSE:SHOE) announced their earnings results for the second quarter of FY2023 on March 31 2023, which ended on May 16 2023. Compared to the same period of the previous year, total revenue for the quarter increased by 7.9%, to GBP 75.4 million. Unfortunately, net income decreased by 46.5%, standing at GBP 1.5 million.
Market Price
The stock opened at £2.4 and plummeted to close at £2.1, a 13.5% decline from the previous closing price of £2.4. This marks a troubling quarter for the company, which had previously traded at an all-time high in the prior quarter. Analysts are attributing the downturn to a lack of customer confidence in the brand due to recent supply chain disruptions, as well as a decline in demand for SHOE ZONE‘s products.
Additionally, the company’s marketing strategies have been ineffective, leading to a decrease in sales and revenue. Overall, this quarter signals a troubling time for SHOE ZONE and it will need to implement new strategies in order to regain customer confidence and boost sales. The company has also made efforts to reduce its operational costs in order to minimize the impact of this downturn. It remains to be seen if these measures are sufficient enough to turn the company’s fortunes around. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Shoe Zone. More…
| Total Revenues | Net Income | Net Margin |
| 161.69 | 9.51 | 5.9% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Shoe Zone. More…
| Operations | Investing | Financing |
| 27.1 | -4.24 | -23.86 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Shoe Zone. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 86.03 | 58.96 | 0.56 |
Key Ratios Snapshot
Some of the financial key ratios for Shoe Zone are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 0.8% | 44.4% | 8.0% |
| FCF Margin | ROE | ROA |
| 11.7% | 25.0% | 9.4% |
Analysis – Shoe Zone Intrinsic Value
GoodWhale has conducted a thorough analysis of SHOE ZONE‘s fundamentals and used our proprietary Valuation Line to arrive at a fair value of the company’s share which is approximately £1.4. However, the stock is currently trading at £2.1, which implies an overvaluation of 51.9%. As such, SHOE ZONE is an ideal stock to shortsell in its current position. More…
Peers
It has a range of competitors, including Brown (N) Group PLC, Delta Apparel Inc, and Caleres Inc. All of these companies offer quality footwear to customers around the world.
– Brown (N) Group PLC ($LSE:BWNG)
Brown (N) Group PLC is a British multinational company that operates in the retail sector. It was founded in 19xx and is currently listed on the London Stock Exchange. The company has a current market capitalization of 124.33M and a Return on Equity of 1.66%. This indicates that the company is performing well and is profitable. The company’s strategy is to focus on providing value and quality to its customers whilst maintaining a prudent financial approach.
– Delta Apparel Inc ($NYSEAM:DLA)
Delta Apparel Inc is a leading provider of lifestyle, branded consumer apparel products. The company designs, manufactures, and distributes its products in the wholesale and retail markets across the world. As of 2023, Delta Apparel Inc has a market cap of 68.68M and a Return on Equity of 1.25%. Market capitalization is an indicator of a company’s size and fiscal health, and for Delta Apparel it indicates a moderately sized company that has managed to maintain a relatively solid financial position. The Return on Equity indicates that the company has been successful in creating value for its shareholders by effectively using its resources.
– Caleres Inc ($NYSE:CAL)
Caleres Inc is a global footwear retailer and wholesaler. The company has a market capitalization of 664.25 million dollars as of 2023. Caleres’s Return on Equity (ROE) stands at 34.69%. This means that for every dollar of shareholder equity the company generates 34.69 cents of earnings. The company’s strong financial performance is likely to be driven by its wide range of retail and wholesale operations, which are well-positioned to capitalize on the consumer trends in the footwear industry. The company has an extensive portfolio of footwear products, including branded and private label shoes, as well as a strong presence in the global market. With a market cap and ROE such as this, Caleres Inc is well-positioned to continue to provide investors with sound returns going forward.
Summary
Despite revenue being up 7.9% year-over-year to GBP 75.4 million in the second quarter of fiscal year 2023 (ending May 16 2023), Shoe Zone reported a 46.5% decrease in net income to GBP 1.5 million. This news caused Shoe Zone’s stock price to drop on the same day of the announcement. Though the revenue increase is an encouraging sign, investors should be mindful of the decrease in net income and weigh this against Shoe Zone’s current and future performance when making investing decisions.
