Shoe Zone (LON: SHOE), the AIM-listed footwear retailer that runs 253 stores selling own-brand and licensed shoes including Skechers and Hush Puppies, saw its shares surge around a fifth after a pre-market update flagged a cash surplus and a new share buyback.
The stock traded at 72.5p, up 18.85% from Monday’s close of 61p, having opened at 67.5p. That puts shares in the upper third of their 52-week range of 35p to 84p, having spent recent months closer to the bottom of that band.
Shoe Zone said in a trading update released this morning that business had continued positively through July, with cash and equivalents running about £7m ahead of its original budget as at 25 July. A second announcement said the company would launch a share buyback of up to £3.47m, funded by that cash headroom. The programme, running from today until 26 October or until the funds are used up, will be managed independently of the board by Zeus Capital, Shoe Zone’s nominated adviser and broker on AIM.
Crucially, the Board reiterated rather than raised its guidance, continuing to expect an adjusted pre-tax loss of no more than £1.0m for the year to 3 October, excluding foreign exchange movements. That makes today’s move a reaction to a cash and capital-return signal rather than to any improvement in underlying profitability, which explains why the shares have re-rated sharply on a release that still points to a loss for the year.
Shoe Zone is thinly traded on AIM, and today’s volume has run well above its recent daily norm, a pattern consistent with a small, illiquid stock reacting hard to a concentrated piece of news landing before the market opened.
The buyback itself is the clearest near-term catalyst still in play: it continues through to 26 October or until the £3.47m allocation is exhausted, giving Zeus Capital scope to keep supporting the shares in the market over that period.