Joules Group PLC (AIM:JOUL) shares nose-dived after the lifestyle retailer warned that profits for the current year will fall short of market expectations as its performance continues to be hit by supply chain constraints and staff shortages.
The group forecast profit before tax and adjusting items of £9mln-£12mln for the year to 27 May 2022, provided there are no further restrictions related to the COVID-19 pandemic.
“Global supply chain challenges are expected to remain during at least the second half of the group's financial year and there is increased consumer uncertainty as a result of the emergence of the Omicron coronavirus variant,” Joules cautioned in a trading statement.
The spread of the Omicron variant of coronavirus has led to new restrictions across the UK in the past week, with the return of home working and mandatory face coverings in indoor public venues in England.
Joules said supply chain disruption led to higher costs and stock delays in the first half, while labour shortages in its third-party operated distribution centre caused extended delivery times to online customers, stores and wholesale partners.
These challenges, coupled with weaker year-on-year online traffic, meant the group’s performance in November, which included the Black Friday period, was below expectations.
It predicted profit before tax and adjusting items of £2.0mln-£2.5mln for the first six months to 28 November 2021, down from £3.7mln in the same period last year.
Joules reported strong demand for its products in the first half, with revenue increasing by 35% to £128mln, boosted by a rise in active customers to 1.9 million.
Its stores saw 80% revenue growth in the period, which was 3% behind the comparable pre-pandemic period two years ago.
E-commerce grew 14% compared with last year and 54% on a two-year basis, benefitting from the acquisition of Garden Trading.
Garden Trading revenues increased 4% year-on-year and 77% on a two-year basis despite global supply chain problems.
Wholesale revenue increased 16% year-on-year, reflecting the reopening of the group's wholesale partners in the UK and internationally.
However, supply chain issues meant wholesale revenue remained significantly down on a two-year basis.
Joules predicted a strong second-half wholesale performance benefitting from despatches delayed from the first half as well as a stronger orderbook for Spring/Summer 22.
Shares plummeted 23.85% to 148.50p in late morning trade.