Joules issues profit warning as retail sales drop

Retail sales at Joules have been "depressed" over the five-week period to 14 August 2022, resulting in an 8% year-on-year reduction in retail sales in the 11 weeks of the current financial year to date.

As a result, the group expects a "significant loss" in the first half, followed by an improved performance in the second half as the benefits of its business simplification begin to be realised.

In light of this, Joules currently expects to deliver a full year loss before tax, and before adjusting items, below current market expectations.

The British lifestyle brand said that the recent extremely warm and dry summer weather has adversely impacted its full price sales of core categories such as outerwear, rainwear, knitwear and wellies. It has compounded the ongoing subdued consumer demand due to the cost of living crisis.

Retail margins have declined by six percentage points year-on-year, reflecting the shortfall of full price sales and the level of discounting that has been required to engage customers in the highly promotions-driven retail landscape.

The group expects partial recovery to overall margins in the coming months, as sales of full price AW collections become a more important part of the mix.

Wholesale trading for the Joules brand has achieved 10% growth year-on-year, despite delays experienced in US ports.

Earlier this month, Joules confirmed that it is in talks with Next about a potential purchase of £15 million worth of shares.

The group has announced that it continues positive discussions with Next Group about adopting its total platform services to support its long-term growth plans and a potential equity investment.

The news follows the appointment of Jonathon Brown as the new CEO of Joules, effective from 30 September 2022.