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Joules reports growing online sales – but a fall in profits

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Joules reports growing online sales – but a fall in profits

Joules Group said that for the first time, more than half of its sales were made online in the first half of its financial year. But it reported a drop in overall sales and profits related to the later timing of Black Friday, and, at the bottom line, to one-off property and distribution costs. The lifestyle retailer, ranked Top150 in IRUK Top500 research, has focused on a ‘total retail’ strategy of making it easy for shoppers to buy Joules products wherever they are and whenever they want to.

 

Joules reported revenue of £111.6m in the 26 weeks to November 24, down by 1.4% on the same time last year. But when this year’s Black Friday was included by comparing the 27 weeks to December 1 with the same 27 weeks a year earlier, sales were up by 3.1%.

 

Pre-tax profits before one-off costs came in at £8.4m, down by £0.9m (-9.7%) from £9.3m last time but at the bottom-line pre-tax profits came in at £1.7m, down by 81.7% from £9.3m last time, reflecting costs related to stores, head office premises and changes to the way Joules distributes its products.


Online and multichannel results

More than 50% of sales, including those via third-party retailers, were made online for the first time. That’s up from 46.5% a year earlier. Some 24% of store transactions involved digital, from click and collect and order in-store to online returns.

 

International sales accounted for 17% of revenues, and international ecommerce sales grew by about 40% during the period.

 

Joules says it is continuing to invest in its online platform as part of its ’total retail’ strategy to make it easy for customers to buy. This, it says, happens when the brand is available to customers however they want to engage, and that includes “being located where our customers choose to spend their time.”

 

But the retailer also said that supply chain issues around availability had hit sales over the Christmas trading period, as previously reported.

 

Joules is now extending its range and reach into initiatives from new branded products to the Joules marketplace, featuring partner brands.

 

Incoming Joules chief executive Nick Jones, who joined the business in September, said a “robust” first half performance had met expectations in a challenging retail environment and at a time of “widespread discounting” among other brands and retailers.

 

Jones said: “This performance reflects the appeal of the Joules brand, our growing customer base and the flexibility of our ‘Total Retail’ model.

 

“During the period, we invested further in our infrastructure and customer proposition in order to support long-term sustainable growth. This included the roll-out of our new point of sale system across our store estate, enhancing the future profitability and flexibility of our store channel, progressing our new head office development, and launching our Friends of Joules marketplace. Post period end, this investment has continued with the announcement of improvements to our future logistics capability in the UK and US.

 

“Since the period end, we have updated on our disappointing Christmas trading performance, resulting from a stock availability issue impacting our online channel. We have identified the root cause and have taken steps to rebalance the allocation of stock between channels for Spring/Summer 2020 as well as strengthen our underlying processes. I am reassured by the performance we saw in the retail channels where we had good stock availability and by our continued online traffic growth, evidencing the strong customer demand which continues to exist for the Joules brand.”

 

Sustainability

Joules is now focusing on sustainable sourcing and respecting the environment. It has introduced environmentally-friendly ecommerce mailbags, and its wellies can be recycled into equestrian surfacing. Its new head office is partly powered through solar energy and it is working to source more sustainable cotton.

 

Commenting on the figures, Emily Salter, retail analyst at data and analytics business Global Data, said that the Joules figures were sobering. Sales, she said, had slowed significantly from the 17.2% growth reported at this time last year. "Given the tough trading environment in the UK, the retailer should continue to invest in its international proposition by drawing on the appeal of its strong brand identify and ’Britishness’," she said. "The retailer plans to relocate its warehouse in the US to facilitate future growth but this must be well managed to ensure product availability throughout the transition."

 

Joules sells online and through 124 shops in the UK and Republic of Ireland. Germany and the US are its primary international markets.

 

Image courtesy of Joules

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