British fashion retailer Joules Group PLC (LON:JOUL) shares gained after reporting first half revenue growth despite “challenging” trading conditions.
Revenue in the 26 weeks to 26 November rose 17.5% at constant exchange rates to £96.2mln, as it grew its active customer base to more than one million and expanded across new markets.
Retail revenue edged up 16.2% to £65.9mln with growth across stores and e-commerce, as the group opened a net 10 stores during the period.
Wholesale revenue climbed 20.6% to £30.1m, supported by a strong performance in the Autumn/Winter order book, the company said in its pre-close trading update on Tuesday.
Growth in Spring/Summer 2018 order book
"The Joules brand has performed well in the first half of FY18, delivering further expansion across markets, channels and product categories,” said chief executive Colin Porter.
“We look forward with confidence to the second half of the financial year, underpinned by the strength of the Joules brand and our collections. “
Porter said while trading conditions will “remain challenging” amid weak UK consumer confidence, the company has seen growth in the wholesale order book for Spring/Summer 18 and is “well positioned” for the Christmas trading period.
A slump in the pound since the Brexit vote has pushed inflation higher, shrinking disposable incomes and leading to slowdown in consumer spending.
Despite higher import costs, the gross margin in the first half is expected to be broadly unchanged from last year, reflecting discipline in promotional activity and an improvement in the international wholesale gross margin.
Liberum keeps 'buy'
Liberum reiterated a 'buy' rating on the stock, saying it sees the recent share price weakness as unwarranted.
"The group needs 11% sales growth in the second half to meet full year sales numbers suggesting that if current is maintained, upgrades are achievable," it said.
"Joules provides double-digit compound earnings growth (c.20% three-year profit after tax compound annual growth rate) from a disciplined roll-out alongside a highly accretive digital and wholesale model."
Shares rose 1.14% to 266p in morning trading.