Up until this month, Joules (JOUL) was regarded as one of the darlings of UK retail, deftly combining its physical store network with a fast-growing online offering through its ‘total retail’ strategy. All seemed to be progressing well until the group’s post-Christmas trading update.
A stock availability issue constricted online sales over the peak Christmas trading period, effectively squandering the 8 per cent uplift in web traffic achieved in the period. A problem with its inventory tracking overstated the value of the stock in the group’s warehouse, leading it to send too much out to stores. Then, when demand grew online, it was unable to serve the customers. The issue has now been resolved, but the group did not comment on whether demand has held up.
In spite of the hamstrung online operations, digital sales now account for more than half of all retail revenues, compared with 46.5 per cent in the first half of FY2019. The group has been using online growth to drive people to stores, and in the period digital transactions such as click-and-collect, order in-store and online returns accounted for 24 per cent of all store transactions, up from 20 per cent in the prior period. Management is planning to build on both with investments in digital marketing to drive online growth and a potential pipeline of 5-10 new stores over the next 12-18 months.
House broker Peel Hunt is expects adjusted pre-tax profit to fall to £8.8m for FY2020, from £15.5m last year. Likewise, EPS is expected to fall to 7.8p from 14.2p.
|ORD PRICE:||198p||MARKET VALUE:||£177m|
|TOUCH:||196-198p||12-MONTH HIGH:||317p||LOW: 150p|
|DIVIDEND YIELD:||1.1%||PE RATIO:||43|
|NET ASSET VALUE:||54p*||NET CASH:||£2.1m**|
|Half-year to 24 Nov||Turnover (£m)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|
|*Includes intangible assets of £19.9m, or 22p a share. **Excludes £53.1m in lease liabilities.|