Joules sales up but profits dented by Covid costs and supply chain issues

High street fashion retailer Joules has said sales are up but extra costs mean profits will be well below those predicted after it suffered a series of Covid-related setbacks.

Profits had been due to hit between £10 million and £12 million, but bosses said they will now come in at around £5 million.

The company said it was affected by fewer shoppers heading to stores as customers stayed away due to the rise in the Omicron variant – down 36% on the same period before the pandemic.

There were also delays to new stock arrivals due to global supply chain challenges, leaving fewer full-price products available and hitting profit margins.

Sales to third parties in wholesale agreements took a subsequent knock due to the delays, and customer orders were cancelled.

Meanwhile, profits were also hit by rising costs in freight, duties and distribution.

The company’s distribution centre costs more than doubled, and were £1.2 million above expectations, while wage costs were also higher – although they have since reduced.

Bosses said that, as a result, prices of items in its spring-summer collection will be higher for customers.

They will also rein in costs for marketing, at head office and on upgrades to stores.

Older stock will be sold off cheaply through third parties via outlet stores, while Joules’ wholesale operation will be simplified.

Overall, sales in the nine weeks to January 30 were up 31% against the previous year and 19% on a two-year basis.

The company confirmed that revenues in the six months to November 28 were £127.9 million, up from £95.4 million a year earlier, with underlying pre-tax profits of £2.6 million.

But for the full year pre-tax profits are set to be down and will be no less than £5 million, compared with £6.1 million a year earlier, Joules added.