Joules store closures hurt half-year profit after full-year warning
Joules revealed a dramatic plunge in profit to just £1.7m today as it took a £6.7m hit to close stores and relocate its head office in the six months to the end of November.
The figures
Joules booked an 82 per cent drop in profit before tax from £9.3m this time last year to just £1.7m for the first half of its current financial year.
The British lifestyle retailer blamed a late Black Friday but also forked out £6m to close more than four underperforming stores and relocate its head office. Extending its distribution centre lease also cost it £700,000.
Joules had already warned full-year profit would fall far below a forecast £16.7m due to supply issues, triggering a 20 per cent drop in its shares.
A revenue decline of 1.4 per cent to £111.6m year on year compounded the decline in profit as Joules blamed a late Black Friday that fell outside of its first half.
If Black Friday had been included retail revenue would have risen 3.1 per cent, the firm said.
Joules announced £2.1m in net cash, a fall of £2.2m due to spending on its head office, while its gross margin was steady at 54.8 per cent.
The retailer will pay a slightly higher interim dividend of 77p per share despite revealing a steep decline in earnings per share from 8.3p last year to 1.3p.
What Joules said
Chief executive Nick Jones said:
Joules delivered a robust first half sales and margin performance in line with expectations, which was pleasing in the context of a challenging consumer environment and widespread discounting by other clothing brands and retailers.
During the period, we invested further in our infrastructure and customer proposition in order to support long-term sustainable growth. This included the roll-out of our new point of sale system across our store estate, enhancing the future profitability and flexibility of our store channel, progressing our new head office development, and launching our ‘Friends of Joules’ marketplace. Post period end, this investment has continued with the announcement of improvements to our future logistics capability in the UK and US.
Since the period end, we have updated on our disappointing Christmas trading performance, resulting from a stock availability issue impacting our online channel. We identified the root cause, have taken steps to rebalance the allocation of stocks between channels for Spring / Summer 2020 and are strengthening our underlying processes.
I am reassured by the performance we saw in the retail channels where we had good stock availability and by our continued online traffic growth, evidencing the strong customer demand which continues to exist for the Joules brand.