Joules shares plummet by a quarter as CEO declares he’s stepping down

Shares in Joules plunged today after the fashion chain announced the departure of its chief executive and admitted the cost-of-living crisis had hit company earnings.

Nick Jones will leave his post sometime during the first half of the next financial year after three years in charge while the search for a successor is undertaken.

He joined the firm following a long stint at Asda, where he had been the managing director of its clothing range George and later became the senior vice-president of the supermarket giant’s commercial division.

When Jones arrived at Joules, sales at the country wear label were growing handsomely, yet he would soon be forced to steer the business through one of the apparel sector’s most tumultuous periods.

From posting a £23million annual loss in the early stages of the Covid-19 pandemic, the retailer recovered to a modest profit the following year as it benefited from a spike in online trade and healthy demand for homeware and garden furniture.

But while the firm’s share price recovered well over the opening half of 2021, it has tumbled by more than 80 per cent in the past 12 months following a set of profit warnings, increasing costs and supply chain challenges.

Joules shares fell by 25 per cent today even though it reported sales grew by about a fifth in the 13 weeks to 1 May as it declared that trading conditions since the Easter period had led to profits and sales in some categories falling below expectations.

These include US wholesale sales, which the Leicestershire-based company said had been affected by weaker demand and delays in stock deliveries, and third-party sales across certain major UK accounts. 

In addition, the group observed that online demand within its home and garden categories had been badly impacted, with its garden trading division reporting an underwhelming performance during the peak sales period in March and April.

Joules shares fell by 25 per cent today as it declared that trading conditions since the Easter period had led to profits and sales in some categories falling below expectations 

On top of that, it blamed the broader apparel market’s growing reliance on discounted goods and a reduction in sales of full-price clothing for squeezing profit margins.

Joules anticipates these challenges will remain for the first half of the 2023 financial year and remains cautious in its near-term outlook as a consequence. 

AJ Bell investment director Russ Mould warned that whoever becomes the next chief executive of the business will not ‘be blessed with a strong set of cards to play.’

He added: ‘Household budgets are constrained, and while luxury brands serving the very wealthy usually ride out downturns well and cheaper outlets can attract shoppers who are trading down, more premium high street brands look vulnerable.’ 

Despite this, Nick Jones said he was confident about the company’s future, thanks partly to the actions taken under his leadership to reduce costs and streamline operations.

The clothing retailer is particularly focused on slashing its lead times, which it is going about through simplifying its end-to-end product process and reducing its reliance on China for supplies.

From next year, the group is also planning to move to a new wholesale model in the United States and European Union, as well as larger minimum order quantities in the United Kingdom.

Jones remarked: ‘Joules is a fantastic brand with great people, loyal customers, and a differentiated product offering. Underpinned by the strategic actions we are taking to optimise the business, Joules will emerge stronger and better positioned to achieve long-term, profitable growth.’