Omicron and supply chain issues plague Joules’s profitability
The rise of Omicron and ongoing supply chain issues have plagued the profitability of British lifestyle group Joules.
In the six month ended 28 November, Joules’s financial results were in line with previous guidance, as profits went down 29.7 per cent on 2020 levels to £2.6m, while revenues hiked to £127.9m.
But in the last nine weeks, the rise of Omicron caused a 36 per cent slump in retail footfall, while supply chain issues led to lower full price sales mix and wholesale revenue, bringing performance behind board expectations. Operational costs for December and January also doubled, going up £1.2m above expectations.
After taking a number of actions to reduce costs and improve margins, including the liquidation of aged stock, the board is expecting profits for the full year not to be less than £5m.
Commenting on the results, Edison Group’s director of consumer and media Russell Pointon said: “Joules Group’s results for the 9 weeks to 30 January 2022 have been dampened by a number of issues, leaving the British lifestyle retailer short of its own expectations.
“This has been compounded by the global supply chain challenges leading to delays in the arrival of new stock, which has led to higher levels of promotions than expected, and cancelled orders from customers, as well as higher freight costs and lower productivity in the third-party distribution centre.
“If trading recovers in line with management’s previous expectations, they now expect full year profits before tax to be no lower than £5m, and they believe they have sufficient liquidity.”