Joules, the struggling lifestyle retailer, has reported that recent trading has been challenging and that its profits for the first half of the year will be affected. Over the past five weeks, the company has experienced a significant decline in trading due to the exceptionally warm and dry summer weather. This weather has led to a decrease in full-price sales of core categories such as outerwear, rainwear, knitwear, and wellies. In addition, the ongoing subdued consumer demand resulting from the cost of living crisis has further impacted retail sales, leading to an 8% decrease compared to the same period last year.

However, there is some positive news for Joules. The wholesale trading for the Joules brand has seen a 10% year-on-year growth, although there have been delays in US ports. Unfortunately, the wholesale operation of its acquired brand, Garden Trading, has been significantly affected by the general slowdown in the home and garden market. Retail margins for the current financial year have also dropped by approximately 6%, attributed to the shortfall in full-price sales and the high level of discounting required to attract customers in the promotions-driven retail landscape.

Despite these challenges, Joules expects a partial recovery in the coming months as sales of full-price Autumn/Winter collections become more significant. The company has seen an increase in active customer numbers by 10% compared to the previous year and a rise in brand awareness. The company is also making progress in simplifying its business and improving profitability.

However, despite these positive signs, Joules anticipates a significant loss in the first half of the year. The company expects that the second half will see an improved performance as the benefits of business simplification start to materialize. As a result, the company is expected to post a full-year loss before tax, significantly below current market expectations.

Although facing challenging trading conditions, Joules is not currently facing any liquidity problems. The company has taken steps to strengthen its finances, including ongoing discussions with Next Group regarding the adoption of Total Platform services and a potential equity investment. While there is no certainty that these discussions will lead to an agreement, any further announcements will be made when appropriate.

Useful Links:
1. Joules Official Website
2. Next Group Official Website