8 December 2020
Joules Group plc
('Joules' or the 'Group')
Pre-Close Trading Update
Continued strong e-commerce growth reflecting the strength of the Joules brand and its growing customer base
Joules, the premium British lifestyle brand, is pleased to provide a Pre-Close Trading Update in respect of the 26-week period ended 29 November 2020 (the first half of the Group's financial year ending 31 May 2021 or the "Period").
The positive trading trends reported in the Group's update on 5 November 2020 have persisted through the important Black Friday trading period and into the Christmas trading period so far, with sales for the Period remaining ahead of the Board's initial expectations. This performance continues to be driven by strong e-commerce growth, with total e-commerce sales up by 35% in the Period and revenue from Joules' own e-commerce channels1 up by 45%. E-commerce represented more than 70% of the Group's retail revenue during the Period.
Joules has continued to deliver strong progress through its own digital channels in the Period, with traffic to the Joules website up more than 40% and further conversion rate improvements. This performance reflects the Group's digital marketing capability and ongoing improvements to the online customer experience. Furthermore, the Friends of Joules digital marketplace has provided customers with a broader online offer with over 10,000 products curated from 300 third-party sellers. Overall, gross platform demand2 increased by nearly 55% in the Period.
Joules' active customers3 now stand at over 1.5m, reflecting strong growth in new customer acquisition over the last three months driven by effective digital marketing investment and the positive impact of the Friends of Joules digital marketplace as well as the desirable, lifestyle locations of the Group's stores.
Group revenue for the Period was £94.5 million, down by 15.3% year-on-year, reflecting the impact of enforced store closures and the cancellation of country shows across the UK, with the Group's total store trading hours during the Period at approximately 60% of their typical trading time.
Despite the strong e-commerce sales growth, total retail revenue of £75.3 million was 6% lower than the comparable prior year period as a result of the enforced store closures as well as lower overall footfall trends where and when stores have been open. When comparing the period that Joules stores were open4 against the prior year, store sales were ahead of the Board's expectations and 17% lower year-on-year. Total store sales in the Period were down by 46% year-on-year.
Retail gross margin decreased by approximately 3%pt in the Period. This reduction was the result of increased promotional activity during the first three months of the Period particularly within the stores channel reflecting the clearance of elevated levels of spring/summer stock within a highly competitive retail environment following the first national lockdown.
Wholesale revenue in the Period was £17.2 million, a 44% reduction year-on-year, reflecting the ongoing impact of Covid-19 on many of the Group's wholesale partners both in the UK and overseas. As a result of the challenges faced by the Group's international wholesale partners and despite continued strong growth through the Group's international websites, total International sales in the Period were down by 29% against the prior year and represented 14% of Group sales.
The Group's balance sheet remains strong with net cash of £15.6 million and liquidity headroom of £64 million.
As a result of the Group's encouraging trading, the Board anticipates reporting PBT (IFRS16 basis, pre-exceptional items) for the Period of between £3.5 million to £4.0 million. Notwithstanding the significant uncertainties that are anticipated to persist over the remainder of the peak trading period and into the next calendar year, the Board remains confident that the Group will achieve its Full Year expectations.
Nick Jones, CEO of Joules, commented:
"The strength of our digital proposition, the increased number of Joules customers and the growing appeal of the brand has meant that Joules has continued to trade well during the Period, despite the impact of enforced store closures.
"We delivered a good Black Friday trading period through our online channel and our Friends of Joules digital marketplace continues to perform ahead of our expectations. We have strong momentum - particularly through our online channel - and a good stock position that underpins our confidence for the peak Christmas trading period. We have been pleased with the performance of our stores in England for the first few days since their re-opening in early December.
"As anticipated, our wholesale sales have been subdued in the first half, however an improved performance over recent weeks and the positive response to our spring/summer 21 ranges, that were sold-in via our digital B2B sales platform, gives us confidence for the recovery of the wholesale channel over the coming seasons.
"The retail sector continues to face a number of near and medium-term challenges, including the ongoing impact of Covid-19 on our communities and economy as well as Brexit-related uncertainties. I have no doubt that Joules, underpinned by the strength of our brand and our flexible and scalable platform that now includes our Friends of Joules digital marketplace, is well positioned to be one of the long-term winners against this challenging backdrop.
"I would again like to thank all of Joules' stakeholders for their continued support and commitment to our brand."
1Excludes third-party online retail platforms that Joules sells through
2 Gross platform demand - total retail sales through the Joules websites, including Friends of Joules, prior to accounting for returns in each period
3Active customer is a customer registered on Joules database who has transacted in the last 12 months
4Stores were closed for approximately 10 weeks (on average) of the Period
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Joules Group plc
Nick Jones, CEO
Marc Dench, CFO
Tel: +44 (0) 1858 435 255
Hudson Sandler (Financial PR)
Tel: +44 (0) 20 7796 4133
Peel Hunt LLP, Nominated Advisor and Joint Broker
Tel: +44 (0) 20 7418 8900
Liberum Capital Limited, Joint Broker
Tel: +44 (0) 20 3100 2000
Joules - a premium lifestyle brand with an authentic British heritage
Joules is a premium lifestyle brand with an authentic heritage. The Joules brand is about family, fun and joy in the countryside. Joules creates and curates exceptional products that brighten the lives of its customer, delivered through a leading digital platform that is 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 … with collections of homeware, toiletries, lifestyle and pet product ranges that are carefully designed and developed through selected licensing partnerships
Joules' distinctive design-led products are complemented by an increasingly broad customer offer provided through its digital marketplace Friends of Joules, enabling 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 brand caters to its 1.5 million active customers through its own digital platform, its retail stores in the UK and at country shows and events. Joules extends its brand reach through well-established 3rd party relationships - concessions, online marketplaces and traditional wholesale - in the UK and internationally.
Internationally, the brand has made good progress in its target markets of the US and Germany, where the distinctive Joules brand and products range resonate well with local customers. International markets are served by wholesale partnerships and dedicated Joules websites.
Joules' performance has been recognised through several awards including:
o Mainstream Brand of the Year - Drapers Awards 2019, 2017 and 2016
o Best Licensed Fashion or Talent Brand Award - Brand & Lifestyle Licensing Awards 2019
o Best Licensed Gifting Product Award - Brand & Lifestyle Licensing Award 2019
o The Best Fashion Retailer (Mark of Excellence) - Retail Week Awards 2019 and 2018
o Fashion Retail Business of the Year (between £101m-£500m turnover) - Drapers Awards 2018 and 2017