Joules says that a 40% rise in online demand during lockdown for its clothing and lifestyle products shows that its brand remains relevant to shoppers even during the coronavirus pandemic. But it warned that sales in the year to May 31 2020 were likely to be down by 12% and that pre-tax losses could reach £3m.
The retailer, ranked Top250 in RXUK Top500 research, yesterday started to open its shops for the first time since the Covid-19 lockdown on March 23, and it will take the process slowly. So far 12 shops out of a portfolio of 128 have opened.
The update came as Joules reported, in a pre-close trading statement, that group revenue had fallen by 12% to £191m in the year to May 31, compared to the previous year. Retail sales came in at about £146m. In-store sales fell by about 20% but online sales rose by about 5% over the year, although sales through its own website rose by more than 11%. The effect of Covid-19 was still more pronounced on its 2,000 wholesale stockists, where trade fell by 26% to about £42m. Full-year pre-tax losses are expected to come in at between £2m and £3m. Joules has also spent about £2.5m on modernising its distribution centres in the UK and US in order to support longer-term growth, and in March transferred the operation to Clipper Logistics.
The retailer believes that its ‘total retail’ strategy will enable it to continue to sell to shoppers in the way that best suits them, and in early April it raised £30m, including £15m in new equity and £15m in bank lending, to bolster its financial position. That gave it cash of £4m and headroom of £53m at the end of its financial year.
Joules chief executive Nick Jones said he was delighted with how Joules had responded to Covid-19 disruption in recent months. “We were quick to adapt to the initial disruption of the Covid-19 pandemic by bolstering our liquidity position, preserving cash and focusing our trading online,” he said. “We are very encouraged with the significant 40% growth in ecommerce demand during the lockdown period, which is particularly pleasing given the already established scale of our ecommerce operations.
“As we move out of lockdown and into a new normal for retail, I am confident that Joules is exceptionally well positioned to continue to react to changing consumer behaviours and that our brand – which brightens our customers’ lives – is more relevant than ever to consumers.
“Whilst we will continue to face very challenging trading conditions over the coming months, the Joules customer base continues to grow, and I believe the brand is stronger than ever. We are now looking forward to the re-opening of our stores as well as those of our wholesale partners.”
So far its Rainbow Edit collection has raised £55,000 for NHS Charities Together and its Covid-19 appeal. Third-party sales via its Friends of Joules digital marketplace have passed expectations as customers opted to buy from more than 200 independent sellers on its online platform.