Joules still powering ahead, sales soar, lifts profit forecast
today Jun 7, 2018
Fast expanding fashion-to-lifestyle brand Joules had good news on Thursday with a trading update for the year to May 27 showing revenue growth approaching 19%. That came as its impressive performances of the first half and the Christmas period continued into what has been a difficult second half for so many other UK retailers.
This company really is on a roll at the moment and seems unstoppable for now. It said group revenues rose by 18.4% to reach £185.9 million, which also adds up to 18.8% growth on a constant currency basis.
It added that “this performance reflects the appeal of the Joules brand, our distinctive product offering and growing customer base.” And who can argue with it based on those figures?
In more detail, its retail revenue increased by around 15.9% on the prior year on both a reported and constant currency basis. This performance was driven by a “very good” e-commerce sales performance, as well as continued growth across the group's UK and Ireland store estate, which benefited from 15 net new stores during the year. It didn’t give a comparable sales figure though.
Wholesale was also a strong performer with a 24% revenue rise, or 25.7% on a constant currency basis. This was driven by strong growth in the Spring/Summer order-book from both its UK and international wholesale customers.
And while wholesale usually has lower margins than retail meaning that higher wholesale turnover can dent profits, even better news is that the management team expects that the group gross margin will be a little ahead of the prior year.
This will benefit the bottom line when Joules’ final results are announced and on Thursday the company said that underlying pre-tax profits will be slightly ahead of analyst expectations, which currently sit at £12.6 million. However, we won't know the exact figure until July 25 when the final figures are announced.
And rather than wholesale being a drag on margins, the margin uplift “is a result of maintaining promotional discipline within retail channels and an improved gross margin in international wholesale, where we have completed the migration of the US third-party distributor activity to an in-house model and seen a favourable product mix with an increased proportion of clothing sales,” the company said.
So what did CEO Colin Porter think about all this? “This performance is testament to the strength and appeal of the Joules brand and our distinctive products,” he said. “Our multichannel approach and 'buy now, wear now' product proposition has enabled the group to deliver a performance ahead of our initial expectations, despite the widely reported challenges in the sector.
“We have made excellent progress against our strategy of further developing the brand in the UK and target international markets and we remain confident of continued growth and expansion of the Joules brand.”
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