Joules expects FY loss after Covid-19 closures

Fashion retailer Joules said on Tuesday that it expects to end the year with a loss after the coronavirus pandemic meant its shops were closed for nearly three months, even as online sales surged over lockdown.

The company expects an underlying pre-tax loss of between £2m and £3m for the year to the end of May.

"The group's financial performance in FY20 was delivered against a backdrop of difficult trading conditions in the brand's core UK market and was also impacted by a stock availability issue through the important end of Autumn/Winter season sales period," it said.

"The impact of Covid-19 on the group between March and May resulted in a material reduction in revenue and a lower group gross margin reflecting the channel sales mix and higher promotional activity during this exceptional period. This was only in part offset by the group's cost reduction initiatives."

Group revenue during the period fell 12% compared to the previous year to £191m, with store sales down 20% and e-commerce sales 5% higher. Wholesale sales, which were also heavily impacted by the pandemic, were down 26% to £42m.

In addition, Joules incurred around £2.5m of non-recurring costs related to its UK and USA distribution centre transformation programmes.

Chief executive officer Nick Jones said: "We were quick to adapt to the initial disruption of the COVID-19 pandemic by bolstering our liquidity position, preserving cash and focusing our trading online. We are very encouraged with the significant 40% growth in e-commerce demand during the lockdown period, which is particularly pleasing given the already established scale of our e-commerce operations."

Joules reopened 12 stores on Monday and said it was proceeding "cautiously" with store re-openings, with several new hygiene measures. It expects to re-open its remaining stores on a phased basis over the coming weeks.

At 0910 BST, the shares were up 8.3% at 124.25p.