Joules issues profit warning after online stock availability troubles

Clothing and accessories retailer Joules has issued a profit warning off the back of an internal stock availability issue which led to a sales decline during the crucial end-of-year trading period.

The business, which has been held up as a model example of multichannel retailing over the last few years following encouraging growth, said sales were down by 4.5% year-on-year in the seven weeks to 5 January 2020, meaning full-year profit will be “significantly below market expectations”.

At the same time last year, Joules reported sales growth of 11.7%, but attributed the setback to “an internally generated stock availability issue through the important end-of-season sale event”.

The retailer said the cause of the problem, which affected online orders, has now been addressed. To support further growth of the brand, the business announced it has outsourced its UK logistics operation. It has also transitioned its US distribution centre to a new partner.

Although these initiatives will incur incremental non-recurring costs during the transition phase, they are expected to deliver significant cost benefits from the end of the next financial year onwards.

Joules said that traffic to its website grew by 8% during the peak trading period, but the inventory glitch meant conversions suffered. Sales in stores and at third-party concessions, where the group reportedly had good stock availability, performed in line with expectations. 

Nick Jones, CEO, said: “We are disappointed with our inability to fully satisfy our customers' demand through our online channel during the important Christmas sale period.

“We have identified the root cause of this one-off issue and have taken steps to prevent its reoccurrence.”

He added: “Demand for the Joules brand and its unique products remains strong, with continued growth in total customer numbers and website traffic as well as robust results in our stores and partner retail channels.”

Joules is set to announce its interim results on 21 January 2020.

Meanwhile, fellow clothing retailer, Superdry, also issued a profit warning today (10 January) after Christmas sales dropped. Revenue was down by 15.8% year on year in the ten weeks to 4 January, with sales sliding in store, online and via wholesale channels.