Joules riding high as global sales soar, no Brexit fears due to careful planning
It's rare these days that a results announcement quotes figures in double-digits and talks of “continuing growth across channels and product categories, both in the UK and internationally.” But this is Joules, and given the impressive growth trajectory that the company has been on in recent years, it would be surprising if its latest report wasn't upbeat.
The company’s results for the year to May 26 show a business in excellent health. Group revenue rose 17.2% to £218m, or 16.8% currency-neutral. Retail revenue, which includes e-commerce, stores and events, increased 22.7% to £159.1m, or 10% like-for-like, driven by e-tail strength.
This reflected growth across all product categories with a strong performance in its core womenswear offer and “positive further development” in accessories and footwear.
E-commerce again shone, growing 58.1% to represent 49.5% of the group's retail revenue, helped by the transition of Next Label and John Lewis womenswear to retail concessions. Underlying growth from its owned e-commerce sites in the UK and internationally was “very strong”, helped by its customer acquisition and retention activity, plus platform improvements and the general transition to online shopping.
Importantly too, international revenue rose 43.5% (or 40.1% currency-neutral) and now represents 16.1% of the total.
And pleasingly, underlying profit before tax was up 19.4% to £15.5m while reported pre-tax profits rose 14.9% to £12.9m.
The group gross margin declined 90 bps to 54.8%, but this was in line with expectations. In the current environment, that’s perhaps not a surprise, although there was more positive news on active customer numbers, which rose 8% to 1.5m.
BEATING THE CHALLENGING MARKET
CEO Colin Porter said he's pleased with the company’s performance so far in the new financial year “with trading in line with our expectations.” Looking ahead, he said “the consumer retail environment is anticipated to remain challenging, particularly in the UK, [but] the board and I believe that Joules remains well-positioned for continued success both in the UK and our target international markets.”
The 30 year old company grew from a clothing stand at a country show in Leicestershire and retains that country lifestyle positioning, a profile that increasingly appeals to city dwellers, suburbanites and anyone who likes their prints colourful and cheerful. Importantly, the brand still sells at rural shows, maintaining a link to its heritage.
But it also now sells in the US, Germany, France and other European markets. As well as its UK and ROI stores, it wholesales to over 2,000 stockists worldwide, including John Lewis and Nordstrom.
Will its markets be affected by the prospects of a no-deal Brexit? The company thinks not as it’s been planning for a long time and it said it “remains well positioned to continue to deliver against its strategic growth objectives.”
So what can we expect in the year ahead? The company will focus on its online sales and said it expects to continue to increase the mix of e-commerce sales as a proportion of its total retail sales “through ongoing enhancements to the customer journey, proposition and engagement, delivered through our e-commerce platform and enhanced Customer Data Platform.”
But its physical shops will remain important, partly because they support the online offer via click & collect and order in-store, but also because they’re paying for themselves anyway. The average payback on new stores remains strong and “well within our appraisal threshold of 24 months, with 95% of our stores delivering a positive profit contribution based on store sales alone,” it said.
The company will continue with a strong presence at country shows and events and will carry on leveraging its wholesale capabilities and relationships. This will “support emerging new retail channels such as online marketplaces and 'fulfilled by' models that offer new routes to reach our target customer base in the UK and internationally, as well as supporting the more traditional concession model.”
It will also continue to expand into lifestyle products (gifting and furniture are already making an impact). And the company is also boosting its international distribution with further expansion in the US and Germany through wholesale and e-commerce.
Important to this will be US wholesale growth with existing partners such as Dillard's, Neiman Marcus and Bloomingdale’s and the addition of online and subscription partners such as Stitch Fix.
German wholesale should continue to grow through independent accounts and online partners, while the company has signed a Middle East franchise agreement with the first store in Dubai due to open this autumn.
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