Joules Group PLC (LON:JOUL) has lost energy during Christmas when an internal error meant available stock did not match online demand, causing a drop in sales from the website.
As a result, full-year underlying profit before tax is now expected to come in “significantly” below the £16.7mln that analysts expected.
READ: Joules enjoys strong Black Friday but sales hit by wholesale changes
Total sales fell 4.5% in the seven weeks to 5 January, swinging lower from the 1.3% growth in the first half of its financial year and the 11.7% recorded in the 2018 festive period.
Website traffic grew 8%, which was down on the 15% growth in the past full year, but stores and third-party concessions performed in line with expectations, the posh welly seller said, following a Black Friday period when it was outperforming the market.
New logistics plan
The AIM-listed retailer said it will invest extra money to improve its logistics operations by hiring a specialist provider, while it will assign its US distribution centre to a new partner.
According to analysts, both operations will cost £1.9mln in 2020 and £700,000mln in 2021, while US tariffs are expected to hit accounts by £500,000 this year and £1.8mln next year.
“Stock planning and merchandising at Joules, as with most retail businesses, is manually supported via spreadsheets,” analysts at house broker Peel Hunt said in a note.
“A manual error resulted in a misallocation of stock between channels in December, with too much being sent out to stores and third parties, leaving web stock short for the Christmas build-up and the sale,” they added.
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.
Shares tanked 28% to 162.67p on Friday at the opening bell.