Joules says sales have been behind expectations over the late summer and early autumn as shoppers spent less online, although slightly more in-store, than expected in a challenging environment.
The fashion and lifestyle retailer is also working on financing options – from an equity raise or a CVA to a bridging loan – as lending deadlines approach.
Trading update
Joules says in a business update today that its sales have been below expectations in the latest quarter of its financial year as ecommerce sales fell faster than expected – although store sales were slightly ahead. This, it believes, reflects a challenging UK economic environment, which has hit both consumer confidence and disposable income. Warmer than expected weather has also affected sales of products such as outerwear, wellies and knitwear – although dresses, menswear and more formal clothes have sold well.
It says that UK wholesale has performed well, but both US wholesale and its Garden Trading business have underperformed.
In its last published set of results, for the six months to November 28 2021, Joules said that 63% of its sales took place online – both through its own website and through partner websites, as business shifted online during the Covid-19 pandemic and associated trading restrictions.
Turnaround plans
The update comes as the fashion and homewares retailer says it has made good progress on a turnaround plan that includes simplifying its wholesale business and ending wholesale sales to the EU and the US. It has revised both its trading and promotion strategy and is focusing on further improving the quality and design of its products.
Joules has had discussions with strategic investors around potentially raising equity to strengthen its balance sheet, and is also looking at alternatives including a CVA (company voluntary agreement). A combination of the two is also possible.
At the end of October, net debt stood at £25.7m, with headroom of £11.4m of which £5.6m is ‘trapped cash’ – held in transit by payment providers – and £5m is due for repayment at the end of this month. Joules is talking to founder Tom Joule and to its lender about a possible bridge financing proposal – although it says there can be no certainty of any agreement being made, or of the terms of any agreement.
Joules is ranked Top100 in RXUK Top500 research.
