Shoe Zone, the low-cost footwear retailer, has announced plans to close several stores due to rising operational costs and falling consumer confidence. The company, which operates 297 stores and employs approximately 2,250 staff across the UK, cited changes to wages and national insurance contributions (NICs) introduced in October’s budget as key drivers behind its decision.

Between October and mid-December, Shoe Zone faced a challenging trading environment, with unseasonal weather and declining consumer confidence negatively impacting sales and profits. The company reported that these pressures were exacerbated by budgetary changes announced by the chancellor, including an increase in the employer NIC rate from 13.8% to 15% starting April 2025. Additionally, the threshold for employer NIC payments was lowered, adding significant financial strain.

These cost increases, combined with declining sales, have rendered several stores unviable. Although the exact number of planned closures remains unclear, the retailer’s store count has already reduced from 309 earlier this year. The business employs 2,500 staff currently, and there has been no statement about any retention or layoffs yet. 

Shoe Zone expects the higher costs to have a major impact on its full-year performance. The company issued its second profit warning this year, revising its adjusted pre-tax profit forecast to £5m—half of its earlier £10m estimate. It also announced the suspension of its dividend for the financial year ending September 2024.

The budget measures, aimed at raising £25bn annually, have drawn criticism from various sectors, including retail and hospitality, which argue that these changes will force businesses to cut jobs and increase prices. Meanwhile, the Bank of England governor, Andrew Bailey, identified employer reactions to NIC increases as a pressing concern for the UK economy amid broader economic uncertainty.

Following the announcement, Shoe Zone’s share price plunged by 44%, reaching 75p—a 66% decline since the start of the year. Industry analysts noted that while external factors have undeniably affected Shoe Zone, management should also examine whether its product offering and strategy are meeting evolving consumer expectations.