(Alliance News) - Lifestyle brand Joules Group PLC on Tuesday said it is expecting to post an underlying loss for its financial year with revenue down, as store sales dropped 20% due to the Covid-19 lockdown.
Shares in Joules were up 8.9% at 125.00 pence in London in morning trading.
The Leicestershire-headquartered clothing retailer said it expects to report an underlying pretax loss of between GBP2 million and GBP3 million for its financial year ended May 31.
Joules said its annual revenue was GBP191 million, a 12% drop from GBP218 million the year before. Retail sales came to GBP146 million, including a 20% drop in store sales and a 5% rise in e-commerce sales. Wholesale sales, also hit by the pandemic, fell 26% to GBP42 million.
From March 23 until after the end of its financial year, the company's entire store portfolio was shut, along with UK wholesale partner stores. Its key international markets, Germany and the US, also had "similarly high levels of disruption".
While Joules's e-commerce channel in the UK was still available during the lockdown, warehouse capacity was constrained by social distancing and hygiene guidance. Despite this, e-commerce demand from the start of lockdown to the end of May was more than 40% higher than the year before and "collection of wholesale receivables was better than previously anticipated".
The company's inventory position was marginally below the year before with the closing balance consisting mostly of current and future season stock, The company plans to carry forward some of its spring and summer inventory to future seasons.
Following cash preservation measures, a GBP15 million equity placing, and a GBP15 million increase to its revolving credit facility, Joules ended financial 2020 with GBP4 million of net cash and headroom of GBP53 million.
"The board is pleased with this cashflow performance, which is ahead of its Covid-19 base case scenario and significantly ahead of its Covid-19 downside scenario. The board expects that, in line with expectations, this net cash position will reduce over the coming months due to seasonal working capital funding requirements and the repayment of amounts due to HMRC and landlords that were deferred as part of the group's Covid-19 mitigation actions," said Joules.
Joules will continue to focus on managing its cost base until visibility on the speed of demand recovery improves across its different channels. On Monday, it re-opened 12 of its 128 stores with the rest set to reopen on a phased basis in the coming weeks.
Chief Executive Nick Jones said: "Whilst this continues to be an exceptionally challenging period for people, communities and businesses, I am delighted with how Joules has responded over 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. We are very encouraged with the significant 40% growth in e-commerce demand during the lockdown period, which is particularly pleasing given the already established scale of our e-commerce 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."
By Anna Farley; annafarley@alliancenews.com
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