UK fashion retailer Joules has put contingency plans in place in the event of a ‘hard Brexit’ – including early product orders and the setting up of an EU distribution hub – as it revealed double-digit revenue growth in its first half.
In a trading update for the six months ended 25 November, Joules posted a 17.6% increase in group revenue to GBP113.1m (US$144.1m), despite what the company says was a challenging period for the sector. The firm hailed the strength of the brand, its product appeal, the flexibility of its UK ‘total retail’ model, and the rapid growth of its international business.
Retail sales grew 21.2% on a reported basis in the period to GBP79.9m, while international revenues were up 11.3%, representing around 16% of group sales. E-commerce also performed particularly well in the first half, Joules said, and now represents nearly 50% of all retail sales.
“This performance, which is ahead of our initial expectations for the period, is testament to the strength of the Joules brand, the engagement of our loyal customers with our product collections, and our fantastic teams,” said Joules CEO Colin Porter. “In the UK, our ‘total retail’ cross-channel model, underpinned by investment in infrastructure, has proven to be well-suited to today’s rapidly changing consumer shopping behaviours. In addition, our international wholesale business continues to make excellent progress by both increasing sales to existing accounts and developing new accounts.”
Even so, the company anticipates trading conditions in the UK will remain challenging over the near term, with “continued macroeconomic uncertainty, rapidly changing consumer shopping behaviours and a highly competitive environment.”
Joules has put contingency plans into place to mitigate the expected disruption that could arise in the event of a ‘hard Brexit’. These include establishing an EU based third-party distribution facility, scheduling earlier inbound product deliveries for its spring/summer 2019 ranges, preparation for expected increased administrative activities, and hedging US dollar requirements more than 12 months forward.
The board, however, remains confident in achieving full year 2019 pre-tax profit in-line with its expectations.
Kate Ormrod, lead analyst at GlobalData, praised Joules’ first-half results adding: “While we live in uncertain times, Joules’ business model and current resilience ensures it remains in good shape to tackle the challenges that lie ahead.”