Follow us


Joules sales up but profits dented by COVID-19 costs and supply chain issues

Lauretta Roberts
01 February 2022

Premium fashion and lifestyle retailer Joules has said sales are up but extra costs mean profits will be below those predicted after it suffered a series of COVID-19 related setbacks.

Group revenue for the 9 weeks to 30 January 2022 was up 31% against FY21 and 19% against FY20, however, this performance, along with the group’s pre-tax profit performance over the same period, is behind the board’s expectations. Revenues in the six months to 28 November were £127.9 million, up from £95.4 million a year earlier, with underlying pre-tax profits of £2.6 million.

Profits for the full financial had been due to hit between £10 million and £12 million but in light of the recent performance the company said they would now come in at around £5 million (versus £6.1 million in FY21).

Joules said it was affected by fewer shoppers heading to stores as customers stayed away due to the rise in the Omicron variant over the peak trading period – with footfall down 36% on the same period before the pandemic.

There were also delays to new stock arrivals due to global supply chain challenges, leaving fewer full-price products available and hitting profit margins. Sales to third parties in wholesale agreements took a subsequent knock due to the delays, and customer orders were cancelled.

Meanwhile, profits were also hit by rising costs in freight, duties and distribution. The company’s distribution centre costs more than doubled, and were £1.2 million above expectations, while wage costs were also higher – although they have since reduced.

Joules said that, as a result, prices of selected items in its spring/summer collection would be higher for customers and that it would also rein in costs for marketing, at head office and on upgrades to stores.

Older stock will be sold off cheaply through third parties via outlet stores, while Joules’ wholesale operation will be simplified.

Russell Pointon, Director of Consumer and Media, at investment research and advisory company, Edison Group, responded to the results: "Joules Group’s results for the 9 weeks to 30 January 2022 have been dampened by a number of issues, leaving the British lifestyle retailer short of its own expectations. The company has delayed the publication of its interim accounts whilst it completes its going concern analysis. H122 results were characterised by signs of a post-pandemic recovery, with revenues of £127.9m, up from £95.4m in the previous year, and at that stage the company was trading in line with expectations. The following weeks however showed weaker results than expected, as the Omicron variant made itself felt over the festive period and beyond, retail footfall is down by 36% versus two years ago.

"This has been compounded by the global supply chain challenges leading to delays in the arrival of new stock, which has led to higher levels of promotions than expected, and cancelled orders from customers, as well as higher freight costs and lower productivity in the third-party distribution centre. Despite group revenue for the period up 31% against FY21 and up 19% against FY20, it is below management's expectations.

"These headwinds are forcing price adjustments and more radical actions such as cost restraint in marketing, head office costs and capex, and the simplification of wholesale operations. If trading recovers in line with management's previous expectations, they now expect full year profits before tax to be no lower than £5m, and they believe they have sufficient liquidity."

Free NewsletterVISIT