By now, private investors are fully aware what a headache the weak pound is causing companies whose input costs are booked in US dollars. But fashion chain Joules (JOUL) is bucking the trend. The group is fully hedged up until the end of its financial year in May 2018 and is confident an uptick in volumes will be sufficient to convince suppliers to compromise on prices. This means customers shouldn't suffer price increases this year, with Joules aiming to stick by its slogan, 'Famous quality, same price'.
The 101 basis point increase in interim gross margins to 55.5 per cent was attributed to product mix, production efficiencies and by keeping promotions to a minimum. The group is also still growing online: e-commerce sales rose by 30 per cent to £19.7m, compared with an 11 per cent increase in store-based retail sales to £34.5m. On the wholesale front - Joules sells to independent retailers and department stores at home, in the US and Germany - sales surged by 17 per cent. International revenues now represent more than 10 per cent of total group sales. There are also plans to bring parts of its US distribution in-house, which will require additional investment this year.
Analysts at Peel Hunt expect pre-tax profits of £9m for the year ending May 2017, giving EPS of 8.2p (up from £7.5m and 6.9p in FY2016).
| JOULES (JOUL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 218p | MARKET VALUE: | £190m | |
| TOUCH: | 215-220p | 12-MONTH HIGH: | 231p | LOW: 163p |
| DIVIDEND YIELD: | 0.3% | PE RATIO: | 200 | |
| NET ASSET VALUE: | 37p* | NET CASH: | £1.6m | |
| Half-year to 27 Nov | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 70.1 | 3.8 | 3.0 | nil |
| 2016 | 81.4 | 6.9 | 6.1 | 0.60 |
| % change | +16 | +80 | +104 | - |
Ex-div: 9 Mar Payment: 6 Apr *Includes intangible assets of £7.4m, or 8.5p a share | ||||
