Joules shares tumble after supply chain problem hits Christmas sales

Marco Green
January 12, 2020

The retailer, known for its colourful wellington boots and Breton stripe tops, admitted sales over the Christmas period suffered after it ran out of stock to sell online.

In an update for the seven weeks to 5 January, the company said sales were "significantly behind" expectations, declining 4.5% against the prior year, when they rose 11.7%.

The group's annual profit had been expected to reach around £16million.

Superdry shares, that hit levels as high as £20.40 in April 2018, were trading at 356.60p this morning, 15 per cent down on the closing price of 471.80p yesterday.

The lifestyle brand noted that this was a result of "disappointing online sales performance due to an internally generated stock availability issue through the important end of season sale event, the cause of which has now been addressed".

The company said it had been "encouraged" by the reaction to the limited range of new designs brought in by the new management, but added this had not been enough "to offset weaker trading on older product".

Traffic to the website grew 8% but conversion was significantly down due to the stock availability issue, Joules said.

Boss Nick Jones said the retailer was "disappointed" with its "inability to fully satisfy our customers" demand' for online shopping during its Christmas sale.

"We have identified the root cause of this one-off issue and have taken steps to prevent its reoccurrence", added Jones.

The company said it has taken strategic decisions in relation to its supply chain operations, establishing an outsourcing partnership with a "leading" logistics provider to operate its United Kingdom logistics operation and transitioning its USA distribution centre to a new partner.

Both Peel Hunt and fellow house broker Liberum slashed Joules's target price from 400p to 250p and 260p respectively, forecasting profit before tax to come in at £10.5mln and £10.1mln respectively.

Jones said that demand for the brand remained strong and that the group's "significant enhancements" to operations in the United Kingdom and USA would "deliver both future capacity growth and efficiency".

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Neil Wilson, chief market analyst at Markets.com, said: "As we noted with Marks and Spencer, discounting is murder if you don't have the brand power to avoid it". That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.

Other reports by Click Lancashire

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