Joules profits hit by later fall of Black Friday

The fashion retailer suffered an 81.7% crash in statutory pre-tax profit to £1.7m in the 26 weeks to November 24, 2019 after booking £6.7m of exceptional charges relating to stores, head office premises and changes in distribution arrangements.

On an underlying basis, pre-tax profit was down 9.3% to £9.7m during the 26-week period, as group sales dipped 1.4% to £111.6m.

Joules said the results were impacted by the timing of the Black Friday sales bonanza, which falls in the second half of its current financial year, as opposed to the first half of 2018/19.

The retailer said that on a comparable 27-week period, including Black Friday, group revenue was up 1.3% and retail revenue increased 3.1%.

Joules’ interim results come less than two weeks after it was forced to issue a profit warning, following what boss Nick Jones described as a spreadsheet error.

The retailer suffered availability issues during the peak Christmas trading period due to a lack of stock. Broker Peel Hunt said the error led to a £6m sales shortfall and a £3.5m impact on profits.

Although Joules said that would impact full-year numbers, it insisted its performance was “robust” during its first half.

Gross margins remained in line with the prior year, while retail gross margins advanced 50bps to 60.8%.

The number of active customers it serves increased 8% to 1.4 million during the period, while its online and international business both continued to grow.

Joules’ overseas sales now account for 17% of group revenue, while ecommerce has grown to gobble up half of all retail revenues.

Chief executive Jones said: “Joules delivered a robust first-half sales and margin performance in line with expectations, which was pleasing in the context of a challenging consumer environment and widespread discounting by other clothing brands and retailers.

“This performance reflects the appeal of the Joules brand, our growing customer base and the flexibility of our ‘Total Retail’ model.”