Johnson Service experiences 'steeper than expected' increase in demand

Textile services provider Johnson Service Group said on Thursday that trading had continued to improve since its last update, but cautioned that maintaining its "normal high service levels" had been a challenge as volumes scaled up rapidly.

Johnson Service said workwear volumes in June were roughly 98% of normal levels, up from 96% in March, as it saw "some uptick in sales opportunities" as businesses returned to "more normal" trading patterns.

In its hotel, restaurant and catering unit, June volumes were over 70% of normal, compared to 30% for the final two weeks of April. However, while the firm said it had been "proactively planning for the anticipated increase", the trajectory of the increase in demand was "steeper than expected" across the industry.

"Whilst volumes remain difficult to predict from week to week, we anticipate that volumes will see further increases as we enter the peak summer months," said JSG.

The AIM-listed firm stated the rapid increase in volumes resulted in all staff being brought back from furlough and it recruiting "a significant number of employees", meaning that production costs had seen an increase.

"This, along with less than optimal productivity in the short term as volume levels build, will have a small impact on margin in the coming months," said the group.

"Maintaining our normal high service levels has been a challenge as volumes are scaling up rapidly. We have been actively working with our customers to resolve the challenges of shifting demand and service delivery has improved significantly in recent weeks."

As of 0950 BST, Johnson Service shares were down 2.19% at 161.0p.