Trading Update & Update on Interim Results
Joules, the premium British lifestyle group, provides a trading update for the second half of the financial year to date as well as an update on the timing of its FY 2022 Interim Results.
Further to the Group’s Trading Update on 14 December 2021, the Group confirms that its financial results for the six months ended 28th November 2021 were in line with previous guidance, with revenues of £127.9m (H1 FY2021: £95.4m) and PBT pre-adjusting items of £2.6m (FY 2021: £3.7m).
Current Trading & Outlook
Group revenue for the 9 weeks to 30 January 2022 was up 31% against FY21 and 19% against FY20, however, this performance, along with the Group’s PBT performance over the same period, is behind the Board’s expectations. This reflects the following factors:
- Weaker than expected revenue in January, in part as a result of the negative impact of the Omicron variant on retail footfall (down 36% vs. the comparable period two years ago);
- Delays to new stock arrivals as a result of global supply chain challenges, resulting in a lower full price sales mix, in turn impacting revenue and gross margin;
- Lower than expected wholesale revenue due to delayed stock and customer cancellations;
- The continued impact on gross margin of increases in freight, duties and distribution costs; and
- Continued operational disruption, lower productivity, and higher than expected costs within the third-party operated Distribution Centre (DC). DC costs for December and January were c.£1.2m above expectations, which is more than double compared to the prior year. In the second half of FY22 so far and post peak trading, wage rates have reduced but are still higher than seen in the comparable prior year period.
In response to the pressures on profitability described above and the overall macro-economic headwinds, the Group has already taken a number of actions to simplify the business, reduce costs and improve margins. These include:
- Cost restraint in marketing, head office and capex;
- Liquidation of aged and slow-moving stock via outlets and third parties;
- Simplifying wholesale operations including exiting selected UK and EU agent and third-party stockist arrangements, introducing minimum order value requirements in the US, and the cancellation of unprofitable orders; and
- Selected appropriate price increases for SS22 reflecting the higher cost environment.
The Board’s base case expectation is for trading for the balance of the year to recover in line with its previously stated expectations, supported by recovering footfall and an improved level of newness in the stock position. The wholesale orderbook for Spring / Summer 22 remains strong and the DC operation is normalising with delivery times back to standard service levels and productivity improved.
Assuming the Board’s base case is met, adjusted PBT for the full year is not expected to be less than £5.0m (FY 2021: £6.1m).
As at 31 January 2022, the Group had net debt of £21.5m, with £11.5m of total liquidity headroom. Based on the expectation set out above, the Group has sufficient liquidity headroom for the foreseeable future.
2022 Interim Results
The Group is in the process of finalising its Interim Results, including completing its going concern analysis, reflecting the impact of trading performance up to the end of January. The Group intends to release its Interim Results as soon as this is concluded.
Joules Group plc
Nick Jones, CEO
Caroline York, CFO
Tel: +44 (0) 1858 435 255
Hudson Sandler (Financial PR)
Tel: +44 (0) 20 7796 4133
Peel Hunt LLP, Nominated Advisor and Joint Broker
Tel: +44 (0) 20 7418 8900
Liberum Capital Limited, Joint Broker
Tel: +44 (0) 20 3100 2000
This announcement contains inside information within the meaning of the Market Abuse Regulation. The person responsible for arranging release of this announcement on behalf of Joules is Caroline York, Chief Financial Officer.
Joules - a premium lifestyle group with an authentic British heritage
Joules is a premium lifestyle brand and group with an authentic heritage and values of family, fun and joy in the countryside.
Joules creates and curates exceptional products that brighten the lives of its customers, delivered through leading digital platforms and supported by enticing experiences and stores that are located in desirable locations relevant to the Joules customer's lifestyle.
The Joules story began in 1989, when Tom Joule started selling clothing on a stand at a country show in Leicestershire. Today, the business designs and sells Joules branded clothing, footwear and accessories for women, men and children as well as collections of homeware, toiletries, lifestyle and pet product ranges that are carefully designed and developed through selected licensing partnerships. Each collection comprises Joules' distinctive use of humour, colour and unique prints, each of which is hand-drawn by the brand's talented in-house print design team at its headquarters in Market Harborough, Leicestershire.
In 2021, Joules acquired leading digital home and garden retailer The Garden Trading Company, strengthening its position in the important and fast-growing home, garden & outdoor category. Similarly inspired by the British countryside, Garden Trading designs and sells distinctive products through its own e-commerce platform and wholesale partnerships with more than 1,000 stockists across the UK.
Joules' distinctive design-led products are complemented by an increasingly broad customer offer provided through its digital marketplace Friends of Joules that enables third party brands to offer curated, complementary products to the Joules customer base, enhancing Joules' digital platform with thousands of products from hundreds of creative businesses to give customers everything they could ever need for a contemporary country lifestyle.
The Joules group caters to its 1.9 million active customers through its own digital platforms, its retail stores in the UK and at country shows and events. Joules extends its brand reach through well-established third-party relationships - concessions, online marketplaces and traditional wholesale - in the UK and internationally.
Internationally, the brand has made good progress in its target markets of the US and Germany, where the distinctive Joules brand and products range resonate well with local customers. International markets are served by wholesale partnerships and dedicated Joules websites.