Joules tumbles after profit warning
Joules warned on Friday that it expects to deliver a pre-tax loss for the full year and said it was in talks with its bank about a waiver of its covenants, sending shares in the fashion retailer tumbling more than 30%.
The company said trading had "softened materially" in the five weeks since its last trading update on 19 July.
"The recent extremely warm and dry summer weather has adversely affected full price sales of core categories such as outerwear, rainwear, knitwear, and wellies and has compounded the ongoing subdued consumer demand due to the well-documented cost of living crisis," it said.
As a result, retail sales have been depressed, with an 8% year-on-year decline in the 11 weeks of the current financial year to date.
Given recent soft trading and weak consumer sentiment, the retailer now 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.
"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," it said.
Joules also on Friday that it expects to require a waiver of certain covenants on its banking facilities and is currently "in positive discussions" with its bank in this regard.
The company announced earlier this month that it was in talks with Next about adopting its Total Platform services and a potential equity investment. These discussions remain "positive", it said, although there can be no certainty they will lead to any agreement.
Joules' house broker Liberum cut its stance on the shares to 'hold' from 'buy' after the update, and put its 150p price target under review.