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Joules' momentum is building

The clothing retailer enjoyed strong growth at the top and bottom lines in the year to May
July 26, 2017

Now the majority of costs associated with its 2016 IPO have been accounted for, investors have a far clearer picture of the underlying growth potential at clothing chain Joules (JOUL). Active customer numbers rose 14 per cent to 907,000, which helped lift sales (see table). Online, the group is performing particularly well: e-commerce sales now account for 35 per cent of total retail sales and grew by 29 per cent in the reported period. Store sales are also growing strongly, supported by 11 net new store openings.

IC TIP: Buy at 303p

Gross margins improved for the second consecutive financial year, from 53.5 per cent to 55.4 per cent. Joules was well hedged against the weaker pound, but has also been proactive in renegotiating the cost of goods with suppliers in Shanghai. According to chief executive Colin Porter, rising volumes have put the group at an advantage in these discussions.

Analysts at Peel Hunt expect pre-tax profit of £11.4m for the year ending May 2018, giving EPS of 10.4p, compared with £10.1m and 9.2p in FY2017.

JOULES (JOUL)   
ORD PRICE:303pMARKET VALUE:£265m
TOUCH:300-305p12-MONTH HIGH:316pLOW: 163p
DIVIDEND YIELD:0.6%PE RATIO:42
NET ASSET VALUE:33p*NET CASH:£6.3m
Year to 28 MayTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2013**77.53.7nana
2014**95.6-0.2nana
20151160.9-0.5nil
2016131-1.2-2.0nil
20171578.97.31.8
% change+20---
Ex-div:26 Oct   
Payment:16 Nov   
*Includes intangible assets of £9.5m, or 11p a share **Pre-IPO figures