Joules H1 revenues rise, 'hard' Brexit contingency plans revealed

Joules bucked the retail gloom on Wednesday as it posted a jump in first-half revenue and said contingency plans have been put in place to mitigate the effects of a potential 'hard' Brexit.

In a pre-close trading update for the 26 weeks to 25 November, the company said group revenue rose 17.6% to £113.1m in what was a "well-documented challenging period for the sector". Joules attributed the solid performance to the appeal of its products, the flexibility of its "total retail" model in the UK and the rapid growth of its international business, which now accounts for around 16% of group revenue.

It said e-commerce performed particularly well and now represents nearly 50% of all retail sales. Meanwhile, wholesale revenue benefited from continued strong growth its target international markets, the US and Germany and a good UK performance. International sales now represent about half of total wholesale sales.

Retails sales were up 21.2% in the half to £79.9m, while wholesale sales were 8% higher at £32.5m.

Given this sales performance, Joules now expects underlying pre-tax profit for the period to be slightly ahead of initial expectations.

As far as Brexit is concerned, the company said its contingency plans include establishing an EU based third party distribution facility, scheduling earlier inbound product deliveries for its Spring/Summer 2019 ranges, preparation for expected increased administrative activities and hedging US dollar requirements more than 12 months forward.

The group said it was confident about achieving its full-year 2019 pre-tax profit expectations thanks to the "robust" first half performance and a strong Spring/Summer 2019 wholesale order book.

Chief executive officer Colin Porter said: "I am delighted to update on what has been another period of strong performance for Joules despite challenging trading conditions. This performance, which is ahead of our initial expectations for the period, is testament to the strength of the Joules brand, the engagement of our loyal customers with our product collections, and our fantastic teams.

"In the UK, our 'total retail' cross-channel model, underpinned by investment in infrastructure, has proven to be well suited to today's rapidly changing consumer shopping behaviours. In addition, our international wholesale business continues to make excellent progress by both increasing sales to existing accounts and developing new accounts."

Liberum reiterated its 'buy' recommendation on the stock after the update, saying the recent share price weakness was unwarranted.

"This H1 update is very strong, particularly in the current tough retail environment, and should be taken well by the market. The strong growth across channels (stores, online, wholesale) reflects not only the group's high quality, well-priced and relatively low-fashion risk product, but also the controlled nature of management's growth strategy and the resilience that this brings.

"In particular, we note management's 'total retail' model, which includes taking a holistic view of its flexible store base and how stores can help support overall growth through multiple means, including acting as showrooms, driving Click & Collect and order-in-store, and facilitating customers' returns."

At 0905 GMT, the shares were up 7.3% to 222p.