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May 4, 2022

Joules CEO Jones to exit as firm issues muted outlook

UK lifestyle retailer Joules has made “good progress” against its strategic plans to simplify the business and optimise its cost base, including lowering its leverage on a China supply base and reducing its wholesale model.

By Hannah Abdulla

Joules confirmed its strategic progress in a bourse disclosure this morning (4 May) where it also indicated Nick Jones, the CEO of Joules, will step down from his role after three years at the helm of the business.

Joules said it would commence the search for Jones’ successor immediately to ensure a smooth transition of responsibilities.

No detail was provided on Jones’ future plans but the board noted he has helped the firm “navigate through an unprecedented trading environment, particularly during the Covid-19 pandemic” and that he has achieved several key strategic milestones including the launch and expansion of Friends of Joules and the growth of the Group’s active customer base and brand awareness to all-time highs.

The group had previously outlined strategic plans to simplify the business and optimise the cost base, whose progress it updated on:

  • Implementing significant changes to its wholesale operations, including exiting the Group’s traditional wholesale model in the USA and EU from SS23 onwards and introducing higher minimum order quantities in the UK. These changes will drive a significant reduction in global wholesale accounts, enabling the Group to focus on long-term, profitable partnerships and to focus on Joules’ own e-commerce channels in the USA and Germany.
  • Improving and simplifying the Group’s end-to-end product process to reduce costs and shorten lead times by up to four months, enabling Joules to increase the proportion of newness, and therefore the opportunity for full price sales, within its collections.
  • Working collaboratively with the Group’s third-party DC provider to enhance efficiencies and resolve operational issues that impacted the peak trading period. DC costs and productivity have now normalised.
  • Diversifying the Group’s long-standing, ethically sourced supplier base. As a result of developing new supplier partnerships, the Group is on track to reduce its exposure to China to less than 50% of historic levels in AW23. In addition to creating a more balanced supplier base, this importantly allows the Group to benefit from shorter lead times from countries including Turkey. Whilst the Group is not currently experiencing significant delays as a result of the latest Covid-19 related lockdowns in China, management is closely monitoring developments and any impact these might have on the Group’s operations.

Outlook

Market conditions have become more challenging during and following the Easter period as consumer confidence has been impacted by the rising cost of living. Joules has not been immune to these sector-wide pressures, which have led the Group’s profit performance to fall below management’s expectations in the following areas:

  • The competitive environment has been increasingly promotional, with customer participation highly dependent on promotional activity and reduced demand for full price items. This has significantly impacted margins through Joules’ own channels.
  • Consumer demand for home and garden categories has been subdued, particularly online, with Garden Trading performing significantly below expectations over its peak sales period in March and April.
  • Third-party sales have been weaker than expected across a number of key UK accounts. US wholesale sales have remained below expectations due to stock delays and lower demand.

Nick Jones, CEO of Joules, commented: “Building on the strategic progress made so far, over the coming months we will continue to deliver against the clear priorities that the Board and I believe will create a strong foundation for Joules to achieve its significant long-term potential, as well as helping the business to navigate the current challenging trading environment.

“Joules is a fantastic brand with great people, loyal customers, and a differentiated product offering. Underpinned by the strategic actions we are taking to optimise the business, Joules will emerge stronger and better positioned to achieve long-term, profitable growth.”

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