Joules lowers profit forecast amid Covid and supply chain disruptions

Joules has reported its pre-tax profits fell to £2.6m in the six months ending 28 November 2021 (FY22), compared to £3.7m in FY21. The group announced that pre-tax profits for the full year is now expected to be £5m, down from the £10m to £12m previously forecast.

Meanwhile, revenues hit £127.9m in the period, up 34% compared to £95.4m in H1 FY21, which is in line with the group’s previous guidance.

The group’s revenues for the nine weeks to 30 January 2022 increased 31% against FY21 and 19% against FY20, however, this performance, along with the group’s PBT performance over the same period, is behind the board’s expectations. 

This is reportedly due to the negative impact of the Omicron variant on retail footfall, down 36% from pre-Covid levels, and delays to new stock arrivals due to global supply chain challenges.

Joules said that its lower than expected wholesale revenues are due to delayed stock and customer cancellations. Additionally, continued operational disruption, lower productivity, and “higher than expected” costs within the third-party operated Distribution Centre (DC) led to the fall in profits. 

DC costs for December and January were £1.2m above expectations, which is more than double compared to the prior year.

The group said the board’s base case expectation is for trading for the balance of the year to recover in line with its previously stated expectations, supported by “recovering” footfall and an “improved level of newness” in the stock position.

Joules said: “The wholesale orderbook for Spring / Summer 22 remains strong and the DC operation is normalising with delivery times back to standard service levels and productivity improved.”