Shoe Zone reports 40.0% Net Income decline in 2019 and 2.8 pp EBITDA Margin decline from 9.0% to 6.2%
08 Jan 2020 • About Shoe Zone (
$SHOE) • By InTwits
Shoe Zone reported FY2019 financial results today. Here are the key drivers of the company's long term financial model:
- Shoe Zone has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.8%. At the same time it's in pair with industry average of 44.1%
- CAPEX is quite volatile: £7m in FY2019, £5m in FY2018, £5m in FY2017, £3m in FY2016, £2m in FY2015
- The company has highly profitable business model: ROIC is 19.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased slightly on 0.89%. Revenue decline was slowing down on average by 1.5 pp per annum in FY2015-FY2019. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 2.8 pp from 9.0% to 6.2% in FY2019.
Gross Margin decreased on 3.5 pp from 19.0% to 15.5% in FY2019. During the last 5 years Gross Margin topped in FY2017 at 19.1% and was declining since that time. SG&A as a % of Revenue decreased slightly on 0.65 pp from 11.9% to 11.3% in FY2019. During FY2015-FY2019 SG&A as a % of Revenue topped in FY2017 at 12.9% and was declining since that time.
Net Income margin decreased on 2.4 pp from 5.9% to 3.5% in FY2019. The efficient tax rate was 14.7% in FY2019.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 4.5% in FY2019. The company's CAPEX/Revenue increased on 2.5 pp from 2.0% in FY2016 to 4.5% in FY2019. Average CAPEX/Revenue for the last three years was 3.6%. Shoe Zone invested a large share of EBITDA (72.1%) to CAPEX. CAPEX as a % of Revenue stuck to a growing trend at 0.79 pp per annum in the last 5 years.
Inventories as a % of Revenue showed almost no change at 17.6% in FY2019.
Return on investment
The company operates at good ROIC (19.6%) and ROE (16.4%). ROIC dropped on 12.1 pp from 31.7% to 19.6% in FY2019. ROE dropped on 11.0 pp from 27.4% to 16.4% in FY2019. During FY2015-FY2019 ROIC topped in FY2018 at 31.7%. During the last 5 years ROE topped in FY2018 at 27.4%.
Leverage (Debt)
The company has no debt. Cash dropped on 27.2%.
Valuation and dividends
Shoe Zone's trades at EV/EBITDA 7.4x and P/E 15.1x.
The company paid 175.0% of Net Income as dividends in FY2019.
Management team
The company has 50.7% shares owned by insiders. Insider ownership didn't change in 2019.
Financial and operational results
FY ended 30 Nov -0001
Shoe Zone ($SHOE) key annual financial indicators| mln. £ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 166.8 | 159.8 | 157.8 | 160.6 | 162.0 | 0.9% |
| Gross Profit | 27.3 | 27.8 | 30.1 | 30.5 | 25.1 | -17.8% |
| SG&A | 10.9 | 17.4 | 20.3 | 19.1 | 18.2 | -4.6% |
| EBITDA | 14.0 | 13.5 | 12.8 | 14.5 | 10.1 | -30.3% |
| EBIT | | | | 11.4 | 6.8 | -40.0% |
| Interest expence | | | | 0.2 | | |
| Tax | | | | 1.7 | 1.0 | -43.3% |
| Net Income | 8.1 | 8.5 | 7.9 | 9.5 | 5.7 | -40.0% |
Balance Sheet
|
|---|
| Cash | 14.2 | 15.0 | 11.8 | 15.7 | 11.4 | -27.2% |
| Inventory | | | | 27.8 | 28.5 | 2.5% |
| Short Term Debt | | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 1.9 | 3.2 | 5.1 | 5.1 | 7.3 | 43.1% |
| Dividends | | | | 5.0 | 10.0 | 100.0% |
Ratios
|
|---|
| Revenue growth | -3.5% | -4.2% | -1.3% | 1.8% | 0.9% | |
| EBITDA growth | -12.7% | -3.3% | -5.8% | 13.7% | -30.3% | |
|
|---|
| Gross Margin | 16.4% | 17.4% | 19.1% | 19.0% | 15.5% | -3.5% |
| EBITDA Margin | 8.4% | 8.5% | 8.1% | 9.0% | 6.2% | -2.8% |
| EBIT Margin | | | | 7.1% | 4.2% | -2.9% |
| SG&A, % of revenue | 6.6% | 10.9% | 12.9% | 11.9% | 11.3% | -0.7% |
| Net Income Margin | 4.9% | 5.3% | 5.0% | 5.9% | 3.5% | -2.4% |
| CAPEX, % of revenue | 1.1% | 2.0% | 3.3% | 3.2% | 4.5% | 1.3% |
|
|---|
| ROIC | 30.0% | 30.6% | 30.7% | 31.7% | 19.6% | -12.1% |
| ROE | 23.8% | 25.6% | 25.9% | 27.4% | 16.4% | -11.0% |
| Net Debt/EBITDA | -1.0x | -1.1x | -0.9x | -1.1x | -1.1x | -0.0x |
People
|
|---|
| Insider ownership | | | | 50.7% | 50.7% | 0.0% |
| Employees | | | | 3,489 | | |
| Revenue/Employee, th. £ | | | | 46 | | |
Peers in General Retailers
Below you can find Shoe Zone benchmarking vs. other companies in General Retailers industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| AO World ($AO.) | 23.8% | 25.7% | 17.0% | 13.6% | |
| Mysale Group ($MYSL) | | 7.0% | 6.4% | 8.9% | -28.6% |
| Aa ($AA.) | 1.0% | -5.0% | -0.2% | 2.9% | |
| United Carpets Group ($UCG) | -4.4% | 6.1% | -0.8% | 2.5% | |
| Caffyns ($78GL) | 8.9% | 10.5% | -8.6% | 0.5% | |
| |
|---|
| Median (9 companies) | 5.5% | 6.1% | -0.8% | 0.5% | -28.6% |
|---|
| Shoe Zone ($SHOE) | | -4.2% | -1.3% | 1.8% | 0.9% |
Top companies by Gross margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Aa ($AA.) | 64.8% | 64.0% | 63.5% | 62.5% | |
| United Carpets Group ($UCG) | 64.3% | 63.8% | 61.2% | 61.5% | |
| French Connection Group ($FCCN) | 46.7% | 46.3% | 45.8% | 45.2% | |
| Lotte Shopping Co Ltd ($LOTS) | 30.6% | 32.6% | 42.0% | 42.1% | |
| Stanley Gibbons Group ($SGI) | 51.5% | 40.3% | 31.6% | 40.0% | |
| |
|---|
| Median (9 companies) | 36.2% | 37.3% | 42.0% | 40.0% | 8.9% |
|---|
| Shoe Zone ($SHOE) | 16.4% | 17.4% | 19.1% | 19.0% | 15.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Aa ($AA.) | 37.9% | 37.4% | 37.6% | 39.4% | |
| Signet Jewelers Ltd ($SIG) | 12.7% | 13.4% | 14.9% | 12.5% | |
| United Carpets Group ($UCG) | 6.6% | 7.9% | 8.2% | 8.1% | |
| Lotte Shopping Co Ltd ($LOTS) | 6.3% | 7.2% | 7.8% | 7.5% | |
| Mysale Group ($MYSL) | -4.7% | 1.8% | 2.0% | 1.8% | -24.3% |
| |
|---|
| Median (9 companies) | 6.6% | 1.8% | 1.9% | 1.8% | -24.3% |
|---|
| Shoe Zone ($SHOE) | 8.4% | 8.5% | 8.1% | 9.0% | 6.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Aa ($AA.) | 3.8% | 8.0% | 7.6% | 6.6% | |
| Signet Jewelers Ltd ($SIG) | 3.8% | 3.5% | 4.3% | 3.8% | |
| Lotte Shopping Co Ltd ($LOTS) | 3.8% | 5.0% | 4.9% | 3.4% | |
| United Carpets Group ($UCG) | 2.8% | 5.7% | 2.1% | 2.9% | |
| Caffyns ($78GL) | 1.4% | 1.6% | 2.2% | 2.6% | |
| |
|---|
| Median (9 companies) | 2.3% | 1.6% | 2.2% | 2.6% | 0.0% |
|---|
| Shoe Zone ($SHOE) | 1.1% | 2.0% | 3.3% | 3.2% | 4.5% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Aa ($AA.) | 34.9% | 32.0% | 30.8% | 32.3% | |
| United Carpets Group ($UCG) | 36.7% | 37.1% | 33.7% | 29.9% | |
| Signet Jewelers Ltd ($SIG) | 15.5% | 15.2% | 16.0% | 13.0% | |
| Caffyns ($78GL) | 37.3% | 10.4% | 7.1% | 5.5% | |
| Lotte Shopping Co Ltd ($LOTS) | 2.6% | 2.3% | 1.9% | 2.7% | |
| |
|---|
| Median (11 companies) | 9.1% | 1.3% | -0.0% | 2.7% | -53.2% |
|---|
| Shoe Zone ($SHOE) | 30.0% | 30.6% | 30.7% | 31.7% | 19.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Aa ($AA.) | 7.9x | 8.0x | 7.6x | 7.0x | |
| Lotte Shopping Co Ltd ($LOTS) | 6.7x | 7.1x | 3.5x | 4.5x | |
| Caffyns ($78GL) | 0.7x | 2.2x | 2.2x | 4.0x | |
| Mysale Group ($MYSL) | | -6.0x | -1.7x | 1.2x | |
| Signet Jewelers Ltd ($SIG) | 1.7x | 1.4x | 1.4x | 0.6x | |
| |
|---|
| Median (6 companies) | -0.4x | 1.4x | 1.8x | 2.6x | |
|---|
| Shoe Zone ($SHOE) | -1.0x | -1.1x | -0.9x | -1.1x | -1.1x |
