Shoe Zone - £3.47m buyback targets nearly half a thin free float
Shares in discount footwear seller Shoe Zone (AIM:SHOE) have continued to grace the daily risers’ leaderboard after yesterday’s positive July trading update. In it, the firm said that trading had continued positively throughout the month and that because of this, “… cash and equivalents as at 25 July 2026 stood at approximately £7.0m ahead of original budget.” We can only assume that the firm missed out a comma here and that cash was ahead of budget and it stood at £7 million. £7 million ahead of budget for the month would be quite something for Shoe Zone; net cash was £7.5 million at the half-year end.
In terms of profits, management are still guiding towards an adjusted loss before tax (excluding foreign exchange gains and losses) of no greater than £1 million for the financial year ending 3rd October 2026. This figure is in line with the improved figure issued following a trading update for May & June where it was revealed that sales were ahead of market expectations. This was aided by a warehouse closing down sale and favourable seasonal weather at half term. Previous full year guidance announced in April was for an adjusted loss of £1 million to £2 million, with guidance released at the time of the full year results in January pointing to a £1 million profit.
Alongside yesterday’s trading update was news that Shoe Zone intends to conduct a share buyback programme via broker Zeus Capital, up to a maximum of c.£3.47 million, ending on 26th October 2026 at the latest. Other terms of the buyback are that no shares will be sold by major shareholders Charles and Anthony Smith, or any other member of the Board or their connected parties.
Charles Smith and connected parties have a c.28.47% stake in the company and Anthony Smith et al have 35.61%. Also, neither Smith will be obliged to make a mandatory offer for the company (as per the Takeover Code) should either of their interests exceed 30% as a result of the buyback programme. This waiver by the Takeover Panel reflects that they are already majority holders and a buyback that increases their percentage doesn't trigger Rule 9.
Shoe Zone 5 year share price chart
The company
Operating from 253 stores around the country and online at shoezone.com, Shoe Zone sells low price, high quality footwear for the whole family. During an average year it sells 13.3 million pairs of shoes at an average retail price of c.£13.
The company has had its troubles in recent years, with the shares having fallen from a peak of around 284p in March 2024 to trade at 72.5p as we write. Both 2024 and 2025 were tough for the firm, with revenues down from c.£166 million to c.£149 million over two years and net profits going from £13.2 million to just £1.9 million. Affecting the business has been a mix of: higher wages, store closures, reduced disposable income amongst consumers, lower footfall on the UK High Street, unseasonal weather conditions and additional costs such as transportation and container prices.
Half year results to 28th March 2026 showed revenues down by 12% at £62.9 million, with a loss before tax of £5.3 million posted against a loss of £2.3 million in the comparative half. The cash performance was good though, with net cash up from £1.7 million to £7.5 million over 12 months after good working capital management, lower capital expenditure, and non-cash costs being added back.
Buyback concerns
For a business seeing tough trading conditions the use of cash via a share buyback may come as a surprise but the firm has undertaken these previously. The last one was completed in June 2023 when £2.25 million worth of shares were bought back and cancelled.
With 76.91% of Shoe Zone shares not in public hands (they are mostly held by the Smiths and Schroders plc) and the current market cap being £33.5 million the free float amounts to around £7.7 million. So this £3.47 million buy back amounts to around 45% of the free float.
As such, given the tight supply, we can see how the buyback may positively affect the share price. However, with the company looking to reduce the number of shares in issue we do have to be wary that management may be wanting to take the company private in the longer term, which would significantly reduce liquidity for any shareholders that are left.
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Disclosures
Shoe Zone is not a corporate client of Optimo Research Ltd.
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