Joules has published its 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, or the “Period”). The Group is providing its trading performance on both a year-on-year and two-year comparative basis; with FY21 H1 characterised by boosted ecommerce demand reflecting Covid-related social restrictions. This includes the enforced closure of stores – both Joules and its wholesale partners – for approximately two months.
Customer demand for the Group’s products remained strong during the Period. The result was Group revenue increasing by 35% (+24% excluding Garden Trading) to approximately £128m (FY21: £95m). This performance reflects growth in active customers to 1.9m, with the Group’s flexible model offering customers multiple channels to shop the Joules brand.
Joules’ stores also 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. This is despite lower high street footfall.
Ecommerce grew 14% and 54% on a two-year basis. This performance benefitted from the acquisition of Garden Trading and the performance of Joules’ third-party ecommerce partners. 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.
This reflects 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 a strong H2 wholesale performance benefitting from despatches delayed from H1 as well as a stronger orderbook for s/s 22.
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. Alongside weaker year-on-year online traffic, performance during this month was below expectations.
Considering these factors, the Group anticipates that profit before tax and adjusting items for the Period will 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. There is also increased consumer uncertainty following the emergence of the Omicron variant.
Supported by a strong stock position and wholesale orderbook, together with actions taken to improve productivity at the DC, the Board expects the Group will achieve continued strong revenue growth in H2 and improved profit performance.
Nevertheless, full-year profit before tax and adjusting items is now forecast to be below current market expectations; in the region of £9m to £12m, notwithstanding any further significant Covid restrictions.
The Group anticipates providing its Interim Results on Tuesday 1 February 2022.
Commenting is Nick Jones, chief executive officer of Joules. “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.”
