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Joules says retail sales are growing and pre-tax profits will be slightly ahead of expectations, but the market remains challenging

Image courtesy of Joules

Joules says it’s continued to see retail sales grow in the opening weeks of its financial year – but that profitability remains under pressure as shoppers opt for markdowns in a “heavily promotional environment”. Nonetheless, it expects that adjusted pre-tax profits will be slightly ahead of market expectations as it has been able to reduce its costs.

The lifestyle clothing, homewares and garden products retail brand, ranked Top100 in RXUK Top500 research, says sales have grown by 8.5% over the first six weeks of its 2023 financial year, to July 10, compared to the same period last year. 

But it also says that market conditions continue to be challenging at a time when the rising cost of living has affected consumer confidence. 

Joules says it has made good early progress on plans to improve profitability by focusing further on selling direct to customers – including in the US and Germany via its existing ecommerce business – while reducing its wholesale business and moving out of wholesale in the US and EU. That is likely to give a small boost to pre-tax profits expectations.

At the same time, it aims to overhaul its supply chain to focus on partnerships that will be profitable long-term, shorten product lead times and diversify its ethically sourced supplier base. That means reducing the proportion of products sourced from China to less than half of historic levels by this autumn. It is now sourcing from countries including Turkey where lead times are shorter. 

Joules also says it has extended its potential lending in order to give it access to more working capital as it stocks up for peak trading. It has added headroom of £5m to existing banking facilities of £32.7m, of which £17.7m is already drawn down. 

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