Joules upbeat despite sales fall, e-tail surges
Joules issued a pre-close trading update on Tuesday and took an upbeat stance, even though revenue has continued to fall due to UK store closures.
The company chose to highlight its ongoing strong e-commerce growth “reflecting the strength of the Joules brand and its growing customer base”.
There was some justification for that stance given that in the 26 weeks to the end of November, it saw a number of positive trading trends and these persisted through the important Black Friday period and into the Christmas season so far.
Sales for period overall are ahead of the board’s initial expectations, with total e-commerce sales that are up by 35% being the driving force.
Also encouraging is that the firm’s own e-commerce channel sales are up by 45%. E-commerce represented more than 70% of the group's retail revenue during the first half. Traffic to its website was up 40% and the conversion rate is improving.
Joules' active customers now stand at over 1.5 million, reflecting strong growth in new customer acquisition over the last three months, “driven by effective digital marketing investment and the positive impact of the Friends of Joules digital marketplace as well as the desirable, lifestyle locations of the group's stores”.
Now for the bad news. Group revenue in H1 fell 15.3% to £94.5 million due to store closures, reduced store hours in some locations and the cancellation of country shows across the UK that are a key sales channel for the business. And total store sales in the period were down by 46% year-on-year. But there was a bright spot. When comparing the period that Joules stores were open against the prior year, store sales were ahead of the board's expectations and only 17% lower year-on-year. But the retail gross margin fell 3ppts as the company was forced to mark down some stock.
Wholesale revenue was £17.2 million, a 44% reduction year-on-year, reflecting the ongoing impact of Covid-19 on many of the group's wholesale partners both in the UK and overseas. International sales were down by 29% against the prior year and represented 14% of group sales.
The company now expects pre-tax profit to be somewhere between £3.5 million and £4 million.
CEO Nick Jones said the company has “strong momentum — particularly through our online channel — and a good stock position that underpins our confidence for the peak Christmas trading period. We have been pleased with the performance of our stores in England for the first few days since their reopening in early December.
“As anticipated, our wholesale sales have been subdued in the first half, however an improved performance over recent weeks and the positive response to our spring/summer 21 ranges, that were sold-in via our digital B2B sales platform, gives us confidence for the recovery of the wholesale channel over the coming seasons.”
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