This prompted Liberum Capital to upgrade its full-year pre-tax profit forecast for the clothing-to-homewares seller rom £4.1 million to £5.1 million, representing a 24% upgrade, driven by more optimistic sales assumptions.
Joules has been hard-hit by the COVID-19 pandemic and results for the year to 31 May 2020 also reflected an online stock availability issue that crimped sales over Christmas and triggered a nasty profit warning.
Sales were down 12.5% to £190.8 million and Joules swung from a £12.9 million profit to a £25.3 million statutory loss before tax, struck after £21.5 million of exceptional costs.
Yet investors focused on the encouraging uptick in sales since re-opening. This demonstrated the strength and relevance of the Joules brand, which draws inspiration from nature and the changing British seasons, and provided a rare sliver of optimism for the distressed retail sector on Thursday.
In the opening nine weeks of the new fiscal year, Joules’ e-commerce demand was up more than 70% year-on-year and marked a strong pick up in momentum since the early part of lockdown.
Furthermore, all of Joules’ brick and mortar stores have now re-opened and are trading ahead of expectations. Joules loyal customers have clearly been keen to support the brand and the retailer has enjoyed buoyant sales of casual clothing in the new work-from-home era.
POSITION OF STRENGTH
‘We were quick to bolster our liquidity position, preserve cash and focus our trading online,’ explained chief executive Nick Jones, ‘and we are very encouraged by the more than 70% growth in e-commerce demand since the start of the new financial year as well as the performance of our stores since reopening. This is testament to the strength of the Joules brand, the relevance of our product range, the desirable locations of our stores and the flexibility of our model.’
While the retail sector will face challenging trading conditions over the coming months, Jones believes that Joules is ‘very well positioned to navigate both the existing and potential further COVID-19-related challenges and continue to invest in targeted growth opportunities.’
He insists the brand’s ‘awareness and health metrics have never been stronger’ and ‘Joules is more relevant than ever before’.
THE LIBERUM CAPITAL VIEW
Liberum Capital commented: ‘Investors should take confidence in the growing platform of “Friends of Joules”, the resilience by the branded retail segment and stand out digital performance.
‘The trends of more casual, longer life product with consumers valuing work/life balance more than ever, will continue to benefit Joules well. We are confident the actions taken over recent months to drive digital sales and manage liquidity in combination with the investments made over recent years in infrastructure mean that the long-term future for Joules remains strong.’