Joules, the Market Harborough-based lifestyle group, is expecting a “significant loss” in its first half, according to a trading update.
It comes as the firm “continues positive discussions” with Next about both adopting its Total Platform services to support its long-term growth plans and a potential equity investment.
In the group’s previous trading update on 19 July, it reported significant pressure on gross margins with consumer appetite weighted towards mark-downs amidst a heavily promotional environment. Over the subsequent five weeks (to 14 August), Joules says trading has softened materially.
It noted that 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 cost of living crisis.
Retail sales have been down over this five-week period, resulting in an 8% year-on-year reduction in retail sales in the 11 weeks of the current financial year to date.
Wholesale trading for the Joules brand meanwhile has achieved 10% growth year-on-year despite delays experienced in US ports.
Joules said: “As a result of the recent softness in trading and the current weak consumer sentiment…the Board 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.”
