Joules warns on profits as supply chain issues weigh

Joules warned on Tuesday that full-year profit will be lower than current market expectations despite strong revenue growth, as it takes a hit from supply chain issues.

In a pre-close trading update, the retailer said full-year profit before tax and adjusted items is now expected to be in the region of £9m to £12m, notwithstanding any further significant Covid restrictions.

"The well-documented global supply chain issues have resulted in some higher costs and stock delays during the period," it said.

"In addition, labour shortages in our third-party operated distribution centre have resulted in extended product delivery times to online customers, stores and wholesale partners. These factors were particularly acute in November, including the Black Friday period, which alongside weaker year-on-year online traffic contributed to performance during this month being below expectations."

In its update for the 26 weeks to 28 November, the clothing retailer said group revenue rose 35% to £128m, with profit before tax and adjusted items expected to have fallen to between £2m and £2.5m from £3.7m the year before.

Retail revenue was 32% higher at £100m, while store revenue jumped 80% to £35m. E-commerce sales rose 14% to £63m and wholesale saw a 47% increase to £25m.

Chief executive Nick Jones said: "Joules has achieved good revenue growth against the prior two comparative periods reflecting the strength of the group's flexible model and despite a challenging external trading environment. Alongside the strong appeal of our core Joules brand, the group continues to benefit from its increased diversification through Friends of Joules and Garden Trading, both of which continue to give customers even more reasons to shop with us.

"While we have not been immune to certain industry-wide pressures including supply chain disruption and cost inflation, we remain focused on delivering the group's long-term growth strategy. We have continued to invest in the business to support our plans and, despite the high levels of near-term consumer uncertainty, we remain very confident in achieving the Group's exciting future potential."

At 1000 GMT, the shares were down 22% at 152.50p.