Liberum downgrades Joules on deteriorating outlook for consumer spend

Liberum downgraded its recommendation for retail and homeware retailer Joules on the back of a deteriorating outlook for consumer spend.

The recommendation was dropped from 'buy' to 'hold' and the broker's 150.0p target price was put 'under review'.

"The unusually hot weather has impacted the sell through of key lines and this together with the overall deteriorating outlook on consumer spending has led to a sharp reappraisal of the short and medium-term outlook," analysts Wayne Brown and Adam Tomlinson said in a research note sent to clients.

Joules's liquidity position was also therefore in focus, although management believed that it remained adequate, they said.

They further noted that the company was continuing its "positive" discussions with its lenders as regarded medium-term financing.

Furthermore, a new chief executive officer was due onboard in September.

Even so, the trading challenges that lay ahead prompted Liberum to now anticipate a loss of £7m before tax for the full 2023 fiscal year.

Indeed, the broker now foresaw a 10% decline in underlying retail sales, versus its prior expectation for a rise of 3%.