19 Aug 2022 07:00
19 August 2022
This announcement contains inside information within the meaning of the Market Abuse Regulation.
Joules Group PLC
("Joules" or the "Group")
Trading & Business Update
Joules, the premium British lifestyle group, provides a trading and business update in respect of the period since the end of its financial year to 31 May 2022.
Recent trading and outlook
In the Group's previous trading update on 19 July 2022, it reported significant pressure on gross margins with consumer appetite weighted towards mark-downs amidst a heavily promotional environment.
Over the subsequent five weeks (to 14 August), trading has softened materially. The recent extremely warm and dry summer weather has adversely affected full price sales of core categories such as outerwear, rainwear, knitwear, and wellies and has compounded the ongoing subdued consumer demand due to the well-documented cost of living crisis. Retail sales have consequently been depressed over this five-week period, resulting in an 8% year-on-year reduction in retail sales in the 11 weeks of the current financial year to date.
Wholesale trading for the Joules brand has achieved 10% growth year-on-year despite delays experienced in US ports, however Garden Trading wholesale has continued to be significantly impacted by the wider slowdown in the home and garden market.
Retail margins in the year to date have declined by c.6%pts year-on-year. This reflects the shortfall of full price sales and the level of discounting that has been required to engage customers in the highly promotions-driven retail landscape. While overall margins have been weak in the year to date, we expect partial recovery in the coming months as sales of full price Autumn/Winter collections become a more important part of the mix.
Active customer numbers now stand at over 2 million which is a 10% increase on last year. Brand awareness is also up by 2.5%pts year-on-year to 47.3%1. The Group continues to make good progress with its initiatives to simplify the business and improve profitability as outlined in previous statements.
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.
Liquidity and covenants
As at the end of July, the Group's net debt was £21.1m, leaving headroom under its bank facilities of £11.4m. Since then, the Group has completed documentation of the previously announced £5m addition to its borrowing facilities. This will be available until November 2022, to help support the Group's working capital requirements over its forthcoming seasonal borrowing peak. The Group will continue to 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.
The Group expects to require a waiver of certain covenants on its facilities and is currently in positive discussions with its bank in this regard.
The Group also continues to have positive discussions with its bank on its medium-term financing, including a review of covenants to enable progress on the previously announced business simplification and cost reduction measures.
Next Group plc discussions
Further to the announcement on 7 August 2022, the Group continues positive discussions with Next Group Plc about both adopting its Total Platform services to support its long-term growth plans and a potential equity investment. There can be no certainty that these discussions will lead to any agreement, and further announcements in this regard will be made if and when appropriate.
The Group now intends to release its results for the financial year ended 31 May 2022 in late October 2022.
Enquiries:
Joules Group plc | Tel: +44 (0) 1858 435 255 |
Ian Filby, Non-Executive Chairman Nick Jones, CEO Caroline York, CFO | |
Hudson Sandler (Financial PR) |
Tel: +44 (0) 20 7796 4133 |
Alex Brennan Lucy Wollam Charlotte Cobb | |
Peel Hunt LLP, Nominated Advisor and Joint Broker | Tel: +44 (0) 20 7418 8900 |
George Sellar Andrew Clark | |
Liberum Capital Limited, Joint Broker | Tel: +44 (0) 20 3100 2000 |
John Fishley Edward Thomas |
The person responsible for arranging release of this announcement on behalf of Joules is Caroline York, Chief Financial Officer.
1 Brand Awareness based on YouGov survey where respondents are asked if they have heard of specific brands
Joules - a premium lifestyle group with an authentic British heritage
Joules is a premium lifestyle brand and group with an authentic heritage and values of family, fun and joy in the countryside. Joules creates and curates exceptional products that brighten the lives of its customers, delivered through leading digital platforms and supported by enticing experiences and stores that are located in desirable locations relevant to the Joules customer's lifestyle.
The Joules story began in 1989, when Tom Joule started selling clothing on a stand at a country show in Leicestershire. Today, the business designs and sells Joules-branded clothing, footwear and accessories for women, men and children as well as collections of homeware, toiletries, lifestyle and pet product ranges that are carefully designed and developed through selected licensing partnerships. Each collection comprises Joules' distinctive use of humour, colour and unique prints, each of which is hand-drawn by the brand's talented in-house print design team at its headquarters in Market Harborough, Leicestershire.
In 2021, Joules acquired leading digital home and garden retailer The Garden Trading Company, strengthening its position in the important and fast-growing home, garden & outdoor category. Similarly inspired by the British countryside, Garden Trading designs and sells distinctive products through its own e-commerce platform and many wholesale partnerships across the UK.
Joules' distinctive design-led products are complemented by an increasingly broad customer offer provided through its digital marketplace 'Friends of Joules' that enables third-party brands to offer curated, complementary products to the Joules customer base, enhancing Joules' digital platform with thousands of products from hundreds of creative businesses to give customers everything they could ever need for a contemporary country lifestyle.
The Joules group caters to its more than 2 million active customers through its own digital platforms, its retail stores in the UK and at country shows and events. Joules extends its brand reach through well-established third-party relationships - concessions, online marketplaces, and traditional wholesale.
www.joules.com
www.gardentrading.co.uk
www.joulesgroup.com