Joules outperforms again as UK, Europe and US buy into British lifestyle look
Joules Group is one of the rare success stories in UK retail at present and its full-year results are always an interesting read. So it was on Wednesday when the company reported its figures for the 52 weeks up to May 27.
And once again, those figures were impressive as the company expended at home and abroad and its profits managed to beat its own expectations.
First, the numbers. Group revenues rose 18.4% to £185.9 million and currency-neutral they rose an even better 18.8%. UK sales rose 16.2% and international revenues increased 35.7% (40.4% currency-neutral) and now represent 13.1% of the total. E-commerce continued to boom, increasing 28% to represent 38.4% of total retail sales, up from 34.8% a year ago.
Underlying pre-tax profit raced ahead by 28.5% to £13 million, while underlying EBITDA increased 24.4% to £21.1 million and statutory pre-tax profit was up 25.6% at £11.2 million. The gross margin increased by 25 basis points to 55.7% and active customers increased by 23.4% to 1.15 million.
CEO Colin Porter certainly couldn't be accused of overstating the performance when he said “it has been another strong year of growth for the Joules brand.” And it was encouraging that he “remains confident that this momentum will continue in FY19,” especially given that a number of even very strong UK retail brands have seen a slight slowdown in recent months and weeks.
The brand, which trades heavily on its bright prints and its British heritage, is currently available in the UK, US, Germany, France and other European markets. It has 123 UK/Ireland stores, a “significant” e-business and more than 1,500 stockists globally including John Lewis, Nordstrom, Next label and Dillard’s.
So what is it about its offer that makes it so successful? Well, its Britishness is a key selling point, along with its in-house-designed prints and overall countryside-light lifestyle offer.
This is something that’s particularly appealing in its key non-UK growth markets, the US and Germany, and is also helping it expand its product range into new, “appropriate” product categories.
It all gives Joules a strong USP and the company’s cautious and thorough approach means it's unlikely to fall into the trap of over expanding.
“The group's resolute attention to carefully nurturing the brand has never been more important,” it said in its results statement. “The retail landscape is changing globally as technology provides customers with new ways to buy their favourite products. We are investing in and developing the channels through which we engage with our customers to ensure that their experience is as great online, on social media or through one of our partners as it is in our own stores.”
This approach is paying off with both retail and wholesale growth. Its 18.4% revenue rise this time reflected strength in both segments, as well as in its core Womenswear category “with outerwear, dresses and tops continuing to prove particularly popular with our customers.” Further development of its Accessories, Footwear and Childrenswear categories also contributed to the strong revenue rises.
So what of the future? As mentioned, the firm’s momentum appears to be continuing. The company said that it has seen “good growth in the first few weeks of our new financial year with positive early feedback on our Spring/Summer 2019 ranges from wholesale customers,” which should carry the good news through into early next year.
And, despite acknowledging the massive challenges currently facing UK retail in particular, it added that “Joules is a distinctive brand with a strong connection with its customers and we have a flexible business model and multiple routes to market supported by a well invested infrastructure and a committed and enterprising team.”
Management therefore believes “Joules remains very well positioned to continue to grow and flourish in the UK and internationally despite the uncertain and changing nature of the retail sector.”
This will be achieved partly by a resolute focus on increasing customer value, but also by targeting its investment in the places where sales are most likely to happen in the future.
“E-commerce - is a fast-growing and evolving channel,” CEO Porter said. “We expect to continue to increase the mix of e-commerce sales as a proportion of our total retail sales through ongoing enhancements to our e-commerce platform, the customer proposition and our customer relationship management capability.”
And where does this leave stores? The company still sees “further potential for the brand to increase its physical retail space in the UK and Ireland.” This will be achieved through “selective openings of new stores in attractive locations, opening concessions with carefully selected partners, and selected relocations of existing stores to larger sites that better reflect our brand and product range.”
And it's not ignoring marketplaces either for international growth. “We will leverage our wholesale capabilities and relationships to support emerging new retail channels such as online marketplaces and 'fulfilled by' models that offer new routes to reach our target customer base in the UK and internationally,” it said.
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