Joules expects interim profits to drop despite e-commerce growth

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Joules Group PLC (LON:JOUL) has said it expects its interim profits to more than halve as the coronavirus (COVID-19) pandemic weighs on sales despite growth in its e-commerce segment.


The wellie seller, however, expressed confidence for the peak Christmas trading period after seeing strong momentum, a good stock position and the performance of the stores in England since reopening last week.


READ: Joules to perform in line with guidance despite store closures


Joules said its profit before tax for the 26-week period to November 29, 2020, is expected to come in at GBP3.5mln-GBP4mln, down from GBP8.4mln a year ago, after revenue by dropped 15% to GBP94mln, the retailer said in an update.


Total retail revenue shed 6% to GBP75mln due to enforced store closures, a decline in footfall and consumer confidence, with store sales tumbling by 46%.


Retail gross margin decreased by 3% due to higher promotional activity to clear spring/summer stock following the first national lockdown. But e-commerce, which represents 70% of total sales, was a bright spot with sales jumping 35%.


The AIM-listed firm said it delivered strong progress through its own digital channels thanks to its digital marketing strategy and ongoing improvements to the online customer experience. Its active customers now stand at over 1.5mln.


Wholesale revenue slumped 44% to GBP17mln in the period, reflecting the ongoing impact of COVID-19 on many of the group’s wholesale partners both in the UK and overseas, with international sales down 29%, it added.


The retailer, which expects to deliver full-year results in line with guidance, ended the period with GBP15mln of net cash and liquidity headroom of GBP64mln.


Analysts at house broker Liberum raised the target price to 225p from 150p reflecting “the group’s resilience, growing brand strength and financial health”.


“This has been supported by the combination of a product offer that continues to resonate with consumers; a brand in rude health that is supporting continual growth in the active customer base; and a truly multi-channel model, that has been bolstered by timely investment into systems and infrastructure,” they said.


Shares shed 7% to 157.7p early on Tuesday.


–Adds analyst comment, shares–

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