Joules shares plummet 40% as sales at posh wellies and country wear favourite are hammered by drop in footfall, inflation and stock disruption
- Revenues and profits ‘behind the board’s expectations’ in December and January
- Joules has outlined a cost-cutting exercise to soften the impact on margins
Shares in welly and raincoat retailer Joules are down by more than 40 per cent after the group revealed revenues had been severely impacted by rising costs and stock disruption in the nine weeks to the end of January.
Revenues were up 31 per cent and 19 per cent against 2021 and 2020 levels during the period, but Joules acknowledged these sales, in addition to profits, were ‘behind the board’s expectations’.
In efforts to counter ‘pressures on profitability’, Joules told investors it was practicing ‘cost restraint’ in marketing, head office and capex, liquidating ‘aged and slow-moving stock’, and simplifying wholesale operations.
Joules falls: The welly and raincoat specialist has suffered a decline in sales
The group, which sells clothes, shoes, homeware and garden furniture, revealed performance in the six months to 28 November were in line with previous guidance with revenues of £127.9million and pre-tax profits of £2.6million.
It had initially enjoyed a strong bounce back from lockdown conditions, boosting profit forecasts in June last year as it benefited from Britons’ desire to get back to nature and spruce up their homes and gardens during the pandemic.
However, Joules has since been impacted by weaker than expected revenue in January, which it partly attributed to the impact of the Omicron variant on retail footfall.
The group also highlighted delays to new stock arrivals as a result of global supply chain challenges, which weighed on revenues and gross margin.
Joules saw lower than expected wholesale revenue due to delayed stock and customer cancellations, while gross margin has additionally been hampered by increasing freight, duties and distribution costs.
Joules shares were down 40 per cent by midday to 70.8p.
They have fallen from a June 2021 peak of 305p, having also fallen sharply in December after posting a decline in profits on the previous year.
It told investors: ‘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 [profit before tax] for the full year is not expected to be less than £5million.’