A high street giant has blamed Rachel Reeves‘ “highly adverse” Budget measures for its plunging profits. Retailer Shoe Zone warned earnings are set to fall again due to tough trading.

The chain saw its shares drop 22% in morning trading on Tuesday after it revealed pre-tax profits slumped by more than two-thirds to £3.3million in the year to September 27, down from £10.1m the previous year. It said trading remained under pressure at the start of 2025-26 amid weak consumer confidence. Shoe Zone said Budget measures had sent costs soaring and weighed on shoppers’ spending.

It is forecasting profits will fall to about £1m in the year to October – down by 70% year on year.

Shoe Zone Chairman, Charles Smith, said: “Trading conditions remained challenging in the first quarter of the new financial year, with revenue down on forecast, reflecting ongoing macro-economic pressures that continue to weigh on consumer confidence resulting in lower footfall on the UK high street, alongside the highly adverse Government fiscal policies.

“The Government’s November 2025 budget included an additional increase in the National Living Wage, raising our cost base further, with broader measures not materially improving consumer sentiment.”

In November, the Government announced the National Living Wage would increase to £12.71 per hour for those aged 21 or over in a boost for workers but hit to business.

Shoe Zone has seen its shares sink to the lowest level for five years in recent months as its trading woes have deepened.

It saw store sales drop 10.3% to £113.1m over 2024-25, having ended the year with 28 fewer stores on a net basis, at 269 in total. The retailer shut 39 shops but opened 11, while also revamping six to a larger format.

Mr Smith said Government policy weighed on the previous year, but added other factors also impacted trading.

He said: “Persistent inflation, higher interest rates and reduced disposable income contributed to negative economic and consumer sentiment in the UK.

“Sales were good when there was a reason to buy – such as the warm summer and the back-to-school period. However, discretionary spending remained subdued as consumers exercised greater caution in what they were spending money on.”