Lifestyle retailer Joules expects to report a significant loss for the half year while adding that talks with fashion and homewares retailer Next remain positive.
According to its latest trading update to 14 August, Joules said trading has ‘softened materially’, with its core categories suffering due to subdued consumer demand as a result of the cost of living crisis.
“Retail sales have consequently been depressed over this five-week period, resulting in an 8% year-on-year reduction in retail sales in the 11 weeks of the current financial year to date,” Joules said.
Wholesale trading for the Joules brand has achieved 10% growth year-on-year despite delays experienced in US ports, however Garden Trading wholesale has continued to be significantly impacted by the ‘wider slowdown in the home and garden market’.
Retail margins in the year to date have declined by c.6%pts year-on-year, while overall margins have been weak in the year to date. The brand says it expects ‘partial recovery in the coming months’, while active customer numbers stand over 2 million, an increase of 10% on last year.
“As a result of the recent softness in trading and the current weak consumer sentiment set out above, the Board expects a significant loss in the first half, followed by an improved performance in the second half as the benefits of business simplification begin to be realised,” Joules added.
“In light of this, the Board currently expects the Group to deliver a full year loss before tax, and before adjusting items, significantly below current market expectations.”
Meanwhile, further to the announcement on 7 August 2022, Joules continues ‘positive discussions’ with Next about both adopting its Total Platform services to support its long-term growth plans and a potential equity investment.
“There can be no certainty that these discussions will lead to any agreement, and further announcements in this regard will be made if and when appropriate,” Joules said.