Joules issues profit warning amid supply chain challenges

The retailer revealed group revenue for the nine weeks to 30 January was up 31% compared with the same period in 2021 and up 19% compared with the same period in 2020.

However, Joules added its pre-tax profit performance fell behind board expectations, with January revenues highlighted as weaker than expected.

As a result, Joules stated that adjusted pre-tax profit for the full year “is not expected to be less than £5m”, down from £6.1m on the previous year. It had previously expected full-year profits to be in the region of £9m to £12m.

The challenges were attributed to a decline in footfall, down 36% compared with pre-pandemic levels. Supply chain challenges also had a strong impact on the period, with delays in the arrival of new stock leading to a lower full-price sales mix.

Joules also reported lower-than-expected wholesale revenue for the period as a result of delayed stock and order cancellations. 

Increases in freight, duties and distribution costs also impacted the retailer’s performance, as well as operational disruption within Joules’ third-party operated distribution centre. Costs for the distribution centre were £1.2m higher than anticipated, more than double the cost of the previous year. 

In response to the challenges, Joules has introduced a number of actions to “simplify the business” in an effort to reduce costs and improve margins.

The retailer has put a cost restraint in place across marketing, head office and capital expenditure. Joules has also called for the liquidation of older products both in outlets and via third-party suppliers.

The brand will also simplify its wholesale operations in an attempt to improve supply chain challenges and cut costs. It will exit selected UK and EU third-party stockist arrangements, introduce minimum order requirements for customers in the US and cancel unprofitable orders.

In light of rising inflation, Joules will also introduce “selected appropriate price increases for SS22”.