Joules blames Black Friday timing for first-half hit

British retailer Joules has revealed a half-year hit due to the timing of Black Friday, less than two weeks after poor Christmas trading saw it warn over annual profits.

The group – known for its posh wellies – posted a 10% fall in underlying pre-tax profits to £8.4 million for the 26 weeks to November 24 as sales declined 1.4% after Black Friday fell in the second half this financial year.

It said that, with the Black Friday week included, retail sales rose 3.1%.

But statutory profits were also affected by the costs of closing stores and its new head office, crashing 82% to £1.7 million.

The half-year results come after Joules sparked heavy share falls earlier this month when it warned that full-year profits would be “significantly” behind forecasts following supply chain issues over the key Christmas trading period.

This left it nursing a 4.5% fall in sales over the seven weeks to January 5, falling far short of expectations and Christmas sales growth of 11.7% in the same period a year ago.

However, shares lifted 6% on Tuesday as its half-year results contained no further nasty surprises, with the profit fall largely as expected.

It came as a welcome pick-up after the group has seen a quarter wiped off its stock market value over the past six months.

Recently-appointed chief executive Nick Jones said the result comes amid a “challenging consumer environment and widespread discounting by other clothing brands and retailers”.

But he insisted the stock woes, which knocked online product availability for customers, were now behind it.

“We have identified the root cause and have taken steps to re-balance the allocation of stock between channels for spring/summer 2020 as well as strengthen our underlying processes,” he said.

The company also recently warned of cost headwinds in the second half of the financial year as a result of US-China tariffs, which look set to continue into 2020-21.

Interim results showed the group booked costs of £6.7 million for one-off items, including the potential closure of more than four under-performing stores and its new HQ in Market Harborough.

It is moving to the new site this summer.

Despite the overhaul of its estate, Joules is also opening new stores, having added four since the end of the first half and with up to another 10 planned over the next 18 months.

Retail analysts at Liberum said: “The half-year out-turn is pretty much in line with expectations; however, this has been overshadowed by a more challenging Christmas period.

“We are of the view that this was a one-off instance and growth rates from here should return to higher, more typical levels.”

Joules – which was founded by Tom Joule in 1989 – has 124 stores across the UK and Ireland, as well as an online arm and wholesale business that supplies more than 2,000 stockists worldwide.