'Channel agnostic' Joules still grabbing shopper attention, grows in US, Germany
The half-year to the end of November may have been a nightmare period for many UK retailers, but for Joules, it was another time of rapid progress. Just look at the figures: group revenue up 17.6% to £113.1 million, underlying pre-tax profit up 14.7% to £107.1 million and Ebitda up to £14.6 million from £13.3 million.
Overall retail revenue rose 21.2% and within that, e-commerce performed particularly well (up 35.8%) so it now represents 46.5% of all retail sales.
Meanwhile, wholesale was up ‘only’ 8%, hurt by the impact of “the successful transition of certain wholesale accounts to a retail concession model in the period.” That process should provide “greater future trading flexibility and consistency of [the] customer proposition.”
Ok, we could quibble and note that the 14.7% profit increase lagged the 17.6% revenue rise so margins were clearly impacted. This could have been one reason the firm's shares dipped almost 3% in early trading. The gross margin at 54.8% was 80 basis points below the comparable period in the prior year. It was hurt by the increasing mix of e-commerce sales, which have a lower gross margin than store sales (but deliver a higher operating margin), and by increased levels of new customer acquisition activity in the period.
Yet at a time when most of the UK retail sector was reeling from a wave of consumer indifference, the numbers were undeniably impressive, especially as the company saw a good performance in all channels.
Joules cited the “strength of the brand and flexible 'total retail' model” for delivering profits ahead of initial expectations.
And there was more good news as active customers increased by 20% to 1.4 million, international revenue increased by 64.2% and now represents 15.8% of the group total, and it saw “continued retail sales momentum through the Christmas trading period, with retail sales [up] 11.7% in the seven weeks to 6 January.”
CEO Colin Porter said it was all achieved despite challenging trading conditions and that the brand is continuing to expand in the UK and to "grow very well in both the US and Germany.”
That fast rise in international revenue meant it now represents 15.8% of total group revenue, up from 11.3% a year ago. And to boost that, international wholesale grew by 78% in constant currency, with growth in existing accounts and the addition of several new ones.
The company also delivered growth across all product categories with “continued momentum” in its core womenswear range and the successful extensions of its footwear and accessories categories. This was complemented by the further development of Joules branded products with licence partnerships, including launches of watches and stationery, the expansion of gifting and increased distribution of the sofa range in its deal with DFS. It also has “an exciting pipeline of brand relevant licence arrangements, planned for the second half of this financial year and beyond.”
And it’s these multiple revenue streams that are really important for the brand as it takes advantage of consumer interest from whatever channel, country or product category it comes.
Colin Porter added: “As consumer spending increasingly moves online and as customers have ever more choice as to where to browse and buy brands, our flexible integrated 'total retail' model has enabled us to respond. Our well-developed e-commerce proposition, in combination with our balanced and flexible portfolio of stores in desirable locations and our presence in partner channels, online and in-store, enables us to be agnostic as to where our customers shop. Customers increasingly begin their journey in one channel and end in another, with stores, both Joules-owned and those of our partners, driving brand awareness and new customer acquisition. Similarly increased online traffic continues to drive footfall into stores.”
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