Joules shares surge over 6% despite pretax profits slumping 9.3% year on...

Joules shares surge over 6% despite pretax profits slumping 9.3% year on year

Joules (LON:JOUL) have seen their shares surge on Tuesday despite giving shareholders a modest update.

The firm reported a first half earnings fall with profit falling due to higher impairment costs and revenue slipping, whilst the gloomy British high street continues to struggle.

In the 26 weeks to November 24, the firm saw revenues fall 1.3% year on year to £111.6 million from £113.1 million.

With the inclusion of Black Friday, the firm reported that retail revenue rose 3.1% from last year, which was an impressive take in an otherwise modest update.

Interim pretax profit slumped by 82% to £1.7 million from £9.3 million a year before.

Joules attributed this too £6.7 million worth of impairment costs related to store closures or relocations, a move to a new head office and a distribution centre renovation.

Looking at an underlying basis, the firm said that pretax profits were 9.3% lower than last year with the figure dropping from £10.7 million to £9.7 million.

Nick Jones, Chief Executive Officer, commented:

“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.

During the Period, we invested further in our infrastructure and customer proposition in order to support long-term sustainable growth.  This included the roll-out of our new point of sale system across our store estate, enhancing the future profitability and flexibility of our store channel, progressing our new Head Office development, and launching our ‘Friends of Joules’ marketplace.  Post period end, this investment has continued with the announcement of improvements to our future logistics capability in the UK and US.

Since the period end, we have updated on our disappointing Christmas trading performance, resulting from a stock availability issue impacting our online channel.  We identified the root cause, have taken steps to rebalance the allocation of stocks between channels for Spring / Summer 2020 and are strengthening our underlying processes.  I am reassured by the performance we saw in the retail channels where we had good stock availability and by our continued online traffic growth, evidencing the strong customer demand which continues to exist for the Joules brand.

Since joining Joules in September, I have been impressed by the strength of the brand, the flexibility of our multiple routes to market and our fantastic teams.  I am confident in the opportunities for long-term sustainable growth of the Joules brand across multiple territories and I am excited to lead Joules through this next chapter of growth.”

Sosandar struggle in the clothing market as well

Yesterday, Sosandar (LON:SOS) another operator in the women’s wear market also reported revenue growth but told shareholders about the potential of a wider loss.

Sosandar attributed this wider loss to increased customer acquisition costs, which sent shares crashing on Monday.

The firm said generated a quarterly record net revenue of £3.8 million in the three months to December 31, as net revenue exceeded £1.2 million in each month.

Looking at their recent quarter of trading, Sosandar said that revenue was ahead of management expectations and more than double the revenue generated in the same period the year before and exceeding the £2.8 million recorded in the first half of financial 2020.

Notably, the company said growth in its active customer data base which totals at 110,132 which saw a 93% surge from the same period one year ago.

Joules will feel like they have missed an opportunity to really gain some ground in the sector, however the British retail market is still recovering from external shocks and tough trading.

Shares in Joules trade at 195p (+6.96%). 21/1/20 12:30BST.