Clothes and home wares seller Joules Group PLC (LON:JOUL) took a pre-Christmas slide despite strong growth in half-year revenues and improved margins.
The self-styled premium British lifestyle brand said the group’s revenue in the 26 week period to 27 November was up 16.2% to £81.4mln from £70.1mln in the corresponding period of last year.
Retail revenue was up 15.8% and wholesale revenue rose 17.2%.
The brand has continued to develop in international markets, including expanded product ranges within key US wholesale accounts as well as the launch of Kidswear in a new partnership with a leading US department store, the company said.
The gross margin in the reporting period improved by around a whole percentage point, as the company had to do less discounting to shift stock, while it also boasted of “enhanced distribution efficiencies”, and a favourable product mix within international wholesale sales.
“The group has continued to perform well throughout the first half of the financial year delivering strong growth across all channels. This reflects the strong appeal and quality of our products as well as the appeal of the Joules brand to both new and existing customers,” claimed Colin Porter, chief executive officer of Joules.
“We look forward with confidence to the second half of the financial year and beyond, despite the uncertain macro-economic outlook. We have seen strong growth in our wholesale order book for Spring/Summer 17 and we are well positioned for the Christmas trading period," he added.
Nonetheless, the shares fell 7p to 195.5p, despite some cheerleading from City firms finnCap and Liberum, after Lloyds Bank announced yesterday it had halved its stake to 3.57%.
Broker finnCap said first half sales were marginally ahead of expectations, with growth evident across all channels.
It reiterated its ‘buy’ recommendation and 210p target price, keeping its earnings forecasts unchanged, though it said the chance of those estimates rising was greater than the chance of them being reduced.
Liberum said the update highlighted the resilience of the Joules model.
“The business is well placed heading into Christmas and the multiple growth levers at Joules' disposal continue to give us a high degree of confidence in our forecasts and investment case,” Liberum said.
It reiterated its ‘buy’ recommendation and target price of 235p.