Joules, the Market Harborough-based lifestyle group, has “achieved good revenue growth,” according to a pre-close trading update in respect of the 26-week period ended 28 November 2021 (the first half of the group’s financial year ending 29 May 2022), yet is expecting full year profit before tax to be below current market expectations.
Customer demand for the group’s products remained strong during the period resulting in group revenue increasing by 35% to approximately £128m (FY21: £95m). Joules said this performance reflects continued growth in active customers to 1.9m alongside the strength of the group’s flexible model which offers customers multiple channels to engage with and shop the Joules brand.
Joules’ stores delivered a strong revenue performance, up 80% against the prior year. Store revenue was just 3% behind the comparable pre-pandemic period two years ago despite lower high-street footfall. The company noted that this performance reflects the “attractive locations of the Joules store estate” as well as the opening during the second half of FY21 of five Centre Parcs locations, which have performed particularly well.
E-commerce grew 14% and 54% on a two-year basis. This performance benefitted from the acquisition of Garden Trading and the performance of third-party e-commerce partners. Gross platform demand across Joules’ websites increased by 2% against a transformational prior year supported by continued growth within the Friends of Joules marketplace.
Garden Trading revenues increased 4% year-on-year and 77% on a two-year basis despite global supply chain disruption.
Wholesale revenue, excluding Garden Trading, increased 16% year-on-year reflecting the reopening of the group’s wholesale partners in the UK and internationally. However, revenue remained significantly down on a two-year basis, in part due to supply chain challenges. The board anticipates strong H2 wholesale performance benefitting from despatches delayed from H1 as well as a stronger orderbook for Spring/Summer 22.
The well-documented global supply chain issues have resulted in some higher costs and stock delays during the period. In addition, labour shortages in Joules’ third-party operated distribution centre (DC) have resulted in extended product delivery times to online customers, stores and wholesale partners. These factors were particularly acute in November, including the Black Friday period, which alongside weaker year on year online traffic contributed to performance during this month being below expectations.
Group profit before tax and adjusting items for the period is anticipated to be in the range of £2.0m – £2.5m (FY21: £3.7m). Global supply chain challenges are expected to remain during at least the second half of the group’s financial year and there is increased consumer uncertainty as a result of the emergence of the Omicron coronavirus variant.
Supported by a strong stock position and wholesale orderbook, the business said that with actions taken to improve productivity at the DC, and the ongoing strong customer demand for the group’s products, the board is confident that the group will achieve continued strong revenue growth in H2 and an improved profit performance.
Nevertheless, full year profit before tax and adjusting items is now expected to be below current market expectations and in the region of £9m to £12m notwithstanding any further significant Covid restrictions.
Nick Jones, Chief Executive Officer of Joules, said: “Joules has achieved good revenue growth against the prior two comparative periods reflecting the strength of the group’s flexible model and despite a challenging external trading environment. Alongside the strong appeal of our core Joules brand, the group continues to benefit from its increased diversification through Friends of Joules and Garden Trading, both of which continue to give customers even more reasons to shop with us.
“While we have not been immune to certain industry-wide pressures including supply chain disruption and cost inflation, we remain focused on delivering the group’s long-term growth strategy. We have continued to invest in the business to support our plans and, despite the high levels of near-term consumer uncertainty, we remain very confident in achieving the group’s exciting future potential.”
