Scottish footwear chain Schuh has suffered a sales slowdown after a bumper year which saw staff share a £25 million bonus payout.
Latest annual figures released by the Livingston-based firm showed that sales increased by 7.8 per cent to £266.8m in the year to the end of January with pre-tax profits jumping by 28.1 per cent to £15.2m.
We are always looking at ways to innovate and enhance the customer experienceSchuh finance director David Gillan-Reid
Although the first three quarters of the year saw good growth, Schuh’s new finance director David Gillan-Reid said a challenging Christmas period meant the company found itself “in a much tougher position in the final quarter”.
Recent figures from US parent company Genesco highlight how the Scottish chain has continued to suffer this year. Comparable sales for the second quarter of Genesco’s financial year to 30 July saw a 1 per cent fall in sales. Over the first half of the year Schuh sales are down by 3 per cent.
Robert Dennis, chairman at Genesco – which bought Schuh in 2011 – cited “challenges” at the Scottish company as one of the factors in the group’s third quarter getting off to a difficult start.
The company said that based on sales trend and expectations it has lowered its full-year outlook. Shares in Genesco dropped sharply earlier this month when it posted the figures.
Schuh now operates 125 stores after opening 17 new outlets in the past year, including its first German store in Oberhausen and four standalone childrens stores.
Gillan-Reid said Schuh has continued to focus on customer service and enhancing its online presence.
“We are always looking at ways to innovate and enhance the customer experience,” he said.
During Schuh’s 2015/16 financial year, the company paid out on the bonus scheme put in place at the time of the Genesco acquisition. The amount of bonus payable to staff was dependent upon the business hitting certain performance targets over the first four years. The company exceeded those targets and the maximum bonus of £25m was shared with all eligible staff in May 2015.
The sale of Schuh to Genesco – which is behind brands including Journeys – was valued at up to £125m. Under the deal staff, whose average age was 21 in 2011, received an average of about £16,200 depending on how long they have worked at the company.
The firm’s majority shareholders – managing director Colin Temple and finance director Mark Crutchley, who led a management buy-out of the business in 2004 – each pocketed a reported £25m provided sales targets were achieved. At the time Temple said the deal with Genesco would give the firm the resources to grow faster than it has done in previous years.
During the last year Temple was voted tenth-best CEO in the UK in a poll by employer comparison website Glassdoor.