Joules posts profit fall as costs take toll

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Fashion retailer Joules has suffered a decline in first-half profits as rising costs hit its bottom line.

Joules shopfront

First-half profits fell at Joules

Joules, which last week warned on full-year earnings, reported a decline in interim pre-tax profits before adjusting items to £2.6m from £3.7m in the comparable period last year and £8.4m on a two-year basis.

Group revenue climbed by 35% to £127.9m in the six months to November 28, 2021, and was ahead 15% on a two-year basis.

Store sales rose 80% to £35.5m, “reflecting a very strong recovery in retail demand to almost pre-pandemic levels”.

Total ecommerce sales advanced 14% against the prior period and 53% on a two-year basis, helped by the acquisition of Garden Trading a year ago.

However, although Joules had an improved mix of full-price sales and the return of higher-margin store sales, that was “offset by significant increases to freight costs and outbound Brexit duties and taxes”.

Joules’ operating expenses surged 52.6% to £52.2m over the period, reflecting factors such as the end of government Covid-19 support, a higher wage bill and increased digital marketing costs.

On a statutory basis, pre-tax profit came in at £2.6m compared with £1.3m last year.

Chief executive Nick Jones said: “While the group experienced strong levels of customer demand that resulted in good revenue growth against the prior two comparative periods, group profitability in the first half was impacted by various factors, most notably the severe inflationary cost environment.

“We have a clear plan of action to simplify the business, enhance efficiencies and mitigate the cost pressures that will enable the group to convert the strong levels of customer demand into sustainable, profitable growth.

“While we acknowledge that there are areas within the business where we need to simplify our operations and improve profitability, we remain very excited in our long-term growth prospects.

“We have continued to see improvements in brand awareness and customer numbers, and we are confident that our broadened lifestyle proposition – which benefits from increased product and category diversification through Friends of Joules [the retailer’s online third-party marketplace] and Garden Trading – is more relevant than ever to consumers.”