US prospects for Joules


Fashion brand Joules (LON: JOUL) has already announced that pre-tax profit for the year to end May 2019 will be ahead of previous expectations at around £15.3m. Tuesday’s announcement will provide some indications about the UK retail environment for the company and its international growth potential.

Joules joined AIM in May 2016 after it raised £66m at 160p a share and at one stage the share price had more than doubled, although it has fallen back. It is still above the flotation price at 257p.


Overall revenues were 17% ahead at £218m, which is underlying growth of 13%. Retail sales were 23% ahead at £159.1m, although some of this growth came from switching Next Label and John Lewis womenswear from wholesale to retail. That is around £8m of revenues. Online sales are around 50% of the retail total and are growing rapidly, but store sales were ahead even though the growth expectations were downgraded earlier in the year.

Wholesale revenues were still 3% higher at £57.1m. The underlying growth in wholesale was 22%, due to the increase in international sales. US sales are growing strongly, but margins are lower.

The rest of the revenues come from licensing, such as for sofas in DFS.

The dividend is expected to be increased from 2p a share to 2.6p a share.


Joules intends to put further focus on the US by expanding outside of the wholesale market. There will be additional investment in marketing to US consumers and there could be news about this with the figures.  

The US should have at least reached breakeven last year. Once this moves into profit the group margins will improve.

Store revenues are expected to grow, but they could fall to less than one-fifth of the total by 2022-23. The online revenues would grow far faster and could double its share to around one-third. There should be indications of the continuing trend in the figures.  


The shares are trading on around 19 times 2018-19 earnings. An improvement in profit to £17m is anticipated in the year just started, which would reduce the rating to 17.

Peel Hunt has previously forecast compound annual growth in pre-tax profit of 14.5% over three years. The only one of the larger, growing retail groups that is set to grow faster is boohoo (LON: BOO) and that is on a much higher rating.

The decline in the share price offers a chance to gain exposure to a business with a strong brand and good growth prospects at a reasonable valuation.