Joules: Margins continue to be under pressure as shoppers seek out sale items
Prestige retailer Joules has said discount-hungry consumers have intensified pressures on margins while expecting yearly profit to surpass expectations.
The clothing and lifestyle brand admitted gross margins had “remained under significant pressure” after “consumer appetite” was focused on marked down products.
Shoppers have been hunting for reductions amid monster hikes in energy and fuel bills, with Joules citing a “heavily promotional environment.”
However, the London-listed group saw its share price storm on Tuesday morning after declaring its adjusted profit before tax for the 2022 financial year was anticipated to be “slightly ahead of current market expectations.”
In an earlier trading update this year, Joules acknowledged market conditions had become “more challenging” following the Easter period as consumer confidence was battered by cost of living.
Trading in the final weeks of the group’s financial year had been “consistent” with such trends mentioned earlier in the year, Joules said on Tuesday.
Joules said it had managed to reduce costs further, resulting in Tuesday’s buoyant profit guidance. Shares were up by more than nine per cent on Tuesday afternoon.
It had made “good progress” with plans to boost profit by simplifying the business, including reducing global wholesale accounts in a bid to “shorten product lead times” and “diversify” its “ethically sourced supplier base.”
Sales in the first weeks of the 2023 financial year had seen growth of 8.5 per cent year-on-year.
Earlier this summer, Joules confirmed it had called in the KPMG debt advisory to help boost its cash position.
As of 26 June, it had net debt totaling £17.7m, giving £15.0m headroom within its current banking facilities, in line with board expectations.
It has also been given the green light for an additional £5m headroom on its borrowing facilities with Barclays Bank until November this year. The group will be unable to pay dividends for the period that the facility is in place.
The brand’s CEO Nick Jones announced he was leaving in May after three years at the helm of the firm, having steered it through the Covid-19 pandemic.
Jones said he would stay on until the brand had found a successor, to ensure a smooth transition of leadership.