Joules, the popular fashion lifestyle retailer, has shocked investors with its disappointing Christmas trading update and subsequent profit warning. Despite experiencing strong sales during the Black Friday trading period, the company reported that its festive season sales fell short of expectations. It saw a decline in retail sales from its stores, concessions, and online platform, with a 4.5% drop compared to the previous year.
The company highlighted that the decline was due to its own mistakes, specifically a stock availability issue during a crucial end-of-season sale event. This resulted in underwhelming online sales performance and a decrease in conversion rates. Although online traffic grew by 8%, customers were unable to purchase their desired items due to the stock availability problem.
On a more positive note, Joules stated that its other retail channels, such as stores and third-party concessions, performed well and met expectations thanks to good stock availability. To avoid similar issues in the future and support further growth, the company has taken strategic action regarding its supply chain operations. This includes establishing an outsourcing partnership with a prominent logistics provider for its UK operations and transitioning its US distribution center to a new partner. Despite incurring additional costs during this transitional phase, the company anticipates significant cost benefits starting from FY21.
However, despite these proactive efforts, Joules anticipates a notable decline in its underlying pre-tax profit for FY20, falling well below market expectations. CEO Nick Jones expressed his disappointment in the company’s inability to fully satisfy customer demand through its online channel during the crucial Christmas sale period. Nevertheless, he emphasized that demand for the Joules brand and its unique products remains strong, with continued growth in total customer numbers and website traffic, as well as robust results in stores and partner retail channels.
Investors eagerly await more clarity on Joules’ financial performance when the company announces its half-year results on January 21.
For more information on Joules and its recent challenges, please visit the following links:
1. Joules: Facing Obstacles in Festive Sales
2. Joules’ Strategic Changes to Overcome Stock Availability Issues