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Joules still a sector winner

The clothing chain could still outperform some of its beleagured peers
Joules still a sector winner

A slew of weather-related profit warnings have recently emanated from the UK high street and many have come from clothing retailers. However, seaside brand Joules (JOUL) appears to offer a bright spot, not that this has prevented a significant de-rating of the shares. A recent trading update revealed a near-18 per cent sales surge over the 26-week period ended 25 November 2018 – a performance that reflects the flexibility of Joules’ model, with sales made online, from its own stores and through concessions. It also has a fast-growing international business. The performance is in sharp contrast to many other retailers, which have reported sluggish progress in the run-up to Christmas. Instead, recent trading at Joules suggests the current sell-off of the stock may ignore the strong fundamentals.

IC TIP: Buy at 223p
Tip style
Growth
Risk rating
High
Timescale
Medium Term
Bull points
  • Strong sales growth
  • Good return on capital employed
  • Net cash
  • Good pre-close update
Bear points
  • Competitive retail environment
  • Lease commitments

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