Surging costs dampen interim profits at Joules

Joules Group reported a jump in revenues on Tuesday but said profits had been held back by a surge in costs.

The clothing and lifestyle retailer saw group revenues rise 35% in the 26 weeks to 28 November, to £127.9m, as demand returned to near pre-pandemic levels. Store revenues rose more than 80%, while e-commerce sales strengthened 14%.

Compared to the first half of 2019, group revenues were ahead 15%.

Operating expenses, however, jumped by 52.6% to £52.2m, as government support ended, Joules increased wages at its distribution centre and digital marketing costs rose. Operating profits fell to £3.3m from £4.6m a year previously, and from £9.3m in 2019.

Statutory pre-tax profits rose to £2.6m from £1.3m in November 2021, when the figure was impacted by a one-off £2.4m impairment charge.

Nick Jones, chief executive, said: "While the group experienced strong levels of customer demand that resulted in good revenue growth against the prior two comparative periods, group profitability was impacted by various factors, most notably the severe inflationary cost environment."

Looking ahead, Joules reiterated guidance for full-year adjusted profits of "not less" than £5.0m, compared to 2021’s £6.1m. Joules recently downgraded the guidance from between £10m and £12m.

Jones added: "While we acknowledge that there are areas within the business where we need to simplify our operations and improve profitability, we remain very excited about our long-term growth prospects.

"We have continued to see improvements in brand awareness and customer numbers, and we are confident that our broadened lifestyle proposition - which benefits from increased product and category diversification through Friends of Joules and Garden Trading - is more relevant than ever to consumers."

Aim-listed Joules acquired The Garden Trading Company, an online homewares and garden accessories retailer, last February for £12.5m.

As at 1030 GMT, shares in Joules were ahead 3% at 54.71p. Last week’s trading update, which included the downgrade to full-year guidance, saw the shares fall sharply, and the stock has now lost 59% so far this year.