Joules saw “robust” H1 sales before Christmas slip, online now more than half of retail

By

Sandra Halliday

Published
Jan 21, 2020

After catching a bit of a winter chill over its “disappointing” Christmas trading, UK family fashion and lifestyle retailer Joules was more upbeat Tuesday morning talking of “robust first-half sales and margin performance in line with expectations” for the pre-festive period, despite a profits dip.

Although group sales for the 26 weeks ended November 24 slipped 1.4% to £111.6m, results were skewed by the timing of the Black Friday trading period, (H2 in FY20 but in H1 in the prior year). So on a comparable 27-week period, including Black Friday in both periods, group revenue increased 1.3%, which isn’t a big leap, but is positive nonetheless in the toughest times ever for retail. Its shares rose on Tuesday morning.

Retail revenue was up 3.1% for the wider period and Joules also said e-commerce now represents over 50% of that retail revenue. Active online customers increased by 8% to 1.4m.

International ops, meanwhile, now account for 17% of group revenue, up from 15.8% a year ago.

Pre-tax profit for the 26-week period slipped marginally to £8.4m from £9.3m a year ago while underlying pre-tax profit fell £1m to £9.7m year-on-year.

Group gross margin was in line with the prior year at 54.8% but the retail gross margin rose 50bps to 60.8%, boosted by careful use of promotions and exchange rate hedging.

Net cash-in-hand fell £2.2m to £2.1m due to head office capital expenditure and changes in timings of tax payments.

On 10 January, Joules had announced it suffered a disappointing Christmas, due to online stock availability issues, along with non-recurring costs associated with supply chain initiatives and China-US tariffs, impacting full-year profit expectations.

That meant trading for the seven weeks to January 5 saw retail sales from stores, concessions and online “significantly behind expectations,” falling 4.5% year-on-year, having risen 11.7% in the 2018 Christmas period.

But on Tuesday, CEO Nick Jones, who took on the post last September, was more cheerful and said the H1 performance “was pleasing in the context of a challenging consumer environment and widespread discounting by other clothing brands and retailers. This performance reflects the appeal of the Joules brand, our growing customer base and the flexibility of our 'Total Retail' model.”

During the half, Jones said the group invested further in its infrastructure and customer proposition “in order to support long-term sustainable growth.

“This included the rollout of our new point of sale system across our store estate, enhancing the future profitability and flexibility of our store channel, progressing our new Head Office development, and launching our 'Friends of Joules' marketplace.”