Joules, the premium British lifestyle brand, today updates on the Christmas trading performance of its retail business for the seven-week period to 5 January 2020 (the “Period”), as well as on its outlook for the financial year ending 31 May 2020.
Trading update
As confirmed in the Group’s Pre-Close Trading Update dated 5 December 2019, the Group performed in line with the Board’s expectations during the first half of the financial year and delivered a strong sales performance over the Black Friday trading period.
However, retail sales¹ over the seven-week period as a whole were significantly behind expectations and decreased by 4.5% against the prior year (FY19 comparative period: +11.7%). This was a result of disappointing online sales performance due to an internally generated stock availability issue through the important end of season sale event, the cause of which has now been addressed. Encouragingly, traffic to the Group’s website grew by 8%, however conversion was significantly down due to the stock availability issue.
The Group’s other retail channels, including stores and third-party concessions, where the Group had good stock availability, performed in line with expectations.
Supply chain update
To support further growth of the brand, the Group has taken strategic decisions in relation to its supply chain operations: establishing an outsourcing partnership with a leading logistics provider to operate and enhance the Group’s UK logistics operation and also transitioning our US distribution centre to a new partner. These initiatives will incur incremental non-recurring costs during the transition phase but are expected to deliver significant cost benefits from the end of FY21 onwards.
The Group also expects second half cost headwinds as a result of US-China tariffs, which it expects to continue into next year.
Outlook
Taking the above into account, the Board anticipates that FY20 Underlying PBT² will be significantly below market expectations³.
Nick Jones, Chief Executive Officer, commented:
“We are disappointed with our inability to fully satisfy our customers’ demand through our online channel during the important Christmas sale period. We have identified the root cause of this one-off issue and have taken steps to prevent its reoccurrence.
Demand for the Joules brand and its unique products remains strong, with continued growth in total customer numbers and website traffic as well as robust results in our stores and partner retail channels.
We remain focussed on continuing to expand the Joules brand and are making significant enhancements to our supply chain operations in the UK and US to deliver both future capacity growth and efficiency.”
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