Joules issues profit warning as hot weather scorches sales

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Joules has issued a profit warning for its full year after unseasonably hot weather hit full-price sales.

Joules at Grand Central Birmingham

Joules said sales in its core categories struggled during the heatwave

The struggling fashion and lifestyle retailer said the recent warm weather has led to a decline in sales in its core categories including outerwear, knitwear and wellies.

Compounded by the cost-of-living crisis, Joules’ sales have “softened materially” over the 11 weeks since the end of its previous financial year.

Joules said sales declined 8% during this period, while margins have dropped by six percentage points year on year as the retailer leans into more promotional activities to drive consumer interest.

The retailer’s wholesale arm achieved 10% growth year on year but it said sales in its Garden Trading business were still dampened by the overall slowdown of the homewares sector.

Joules said: “As a result of the recent softness in trading and the current weak consumer sentiment set out above, the board expects a significant loss in the first half, followed by an improved performance in the second half as the benefits of business simplification begin to be realised.

“In light of this, the board currently expects the group to deliver a full-year loss before tax, and before adjusting items, significantly below current market expectations.”

The news comes one month after Joules upgraded its profit forecast and announced an extension of its borrowing facility.

The company said it will “manage cash resources carefully and expects to have sufficient liquidity to manage its working capital requirements including repayment of the extended facilities in November 2022”, but added that it is in discussions to waive certain covenants of the facilities.