Buy Joules dual appeal

Most retailers attempt to use the buzzword ‘omnichannel’ to describe selling online as well as in shops. While Joules may prefer to describe its strategy as “total retail”, it has a better claim than most to making good use of all the selling channels at a modern retailer’s disposal. As of the latest full-year results, roughly half of the group’s retail sales were made online. Retail accounts for 73 per cent of revenue, with most of the rest from wholesale. The store estate continued to grow, with six net openings and total selling space increased by a tenth, and management has done an admirable job of making the online and high-street businesses complement one another. Approximately 20 per cent of in-store transactions came from a digital sale, such as click-and-collect.

However, the store portfolio is trading well regardless of the online operations, with 95 per cent of outlets making a positive contribution to profits on in-store sales alone. What’s more, management has been working to move stores or renegotiate lease terms. The store portfolio now has a “short and decreasing” lease length, with an average of 3.5 years to break.

The group has also been investing heavily in its e-commerce platform, expanding the store portfolio and improving in-store customer experience, as well as investing in social media expertise and content creation capabilities – management is expecting to increase investment in social media in coming years. Joules has also been converting existing wholesale customers to retail concessions to afford it greater control of its brand execution and product range. At the latest full year it had 34 concessions, up from just five a year earlier. 

Capital expenditure came in at £11.5m last year, including an initial £1m on its costly new head office. Spending is expected to jump to £20m in 2020 as investment in the head office ramps up. However, house broker Liberum expects the group to end the year in a net cash position of £6m, broadly flat on the prior year.

International expansion is another key part of the story. Overseas sales grew 43.5 per cent in the past year to just over 16 per cent of revenues, from 13 per cent a year ago. The US and Germany have been the standout performers, but the group is expanding in other markets too.