Joules shoppers remain discount-focused, retailer get liquidity breathing space

By

Sandra Halliday

Published
Jul 19, 2022

Joules issued an important update on Tuesday, not just talking about how trading is going at the moment but giving information on its liquidity situation following reports that it had taken on advisers to boost this.

But first that trading news. The company said trading during the final weeks of its financial year (which ended on 29 May) was “consistent with” trends it had talked about in its previous update in early May. 

It had said back then that “market conditions have become more challenging during and following the Easter period as consumer confidence has been impacted by the rising cost of living”.

But there was some good news as “due to additional cost reductions, the group anticipates FY22 adjusted profit before tax and adjusting items to be slightly ahead of current market expectations”.

And in the first six weeks of FY23, it has seen retail sales growth of 8.5% year on year. However, gross margins have “remained under significant pressure with consumer appetite weighted towards markdowns amidst a heavily promotional environment”. 

Yet it added that it’s “making good progress on its plans to improve profitability by simplifying the business and optimising the cost base”. This includes implementing its previously disclosed plans to reduce its global wholesale accounts to focus on long-term profitable partnerships, shorten product lead times, and diversify its ethically sourced supplier base.

As for that liquidity issue, it said that as of 26 June, it had net debt of £17.7 million, giving £15 million headroom within its current banking facilities. And it has now received credit approval for a further £5 million headroom on its borrowing facilities with Barclays Bank until November to support working capital requirements over its forthcoming seasonal borrowing peak.

It added that “as part of the additional headroom being made available, it is anticipated that the group will grant additional security to Barclays” and “will also be restricted from paying dividends for the period that the facility is in place”.

It’s also in “positive discussions with Barclays on medium-term financing, which the board expects to conclude by September”.