MARKET REPORT: Fashion brand Joules hammered amid warehouse woes

Shares in ‘Yummy mummy’ fashion brand Joules lost over a quarter of their value after it warned on the impact of supply chain challenges and inflation.

The clothing firm posted a 35 per cent rise in revenue to £128million in the six months to November 28, boosted by an increase in customers and strong online trading as lockdown measures shut shops.

However, profits were expected to be between £2million and £2.5million, down from £3.7million last year.

Fashion brand Joules posted a 35% rise in revenue to £128m in the six months to November 28, boosted by an increase in customers and strong online trading

Joules said ‘well-documented global supply chain issues’ had resulted in ‘some higher costs and stock delays’.

Labour shortages at the warehouse of its distributor resulted in delays for online customers, stores and wholesalers, particularly in November, which meant that the monthly performance was below expectations.

It expects supply chain woes to continue into 2022 and said that it had seen ‘increased consumer uncertainty’ as a result of the Omicron Covid variant. Analysts at Liberum cut their target price on the stock to 300p from 350p.

Stock Watch – Cohort

Cohort, a maker of submarine sonar and naval communication systems, plunged to a five-month low after sounding the alarm over profits.

Performance in the six months to October 31 was hit by delivery delays and fewer orders for some products.

The company’s Chess business, which makes targeting systems, did ‘significantly worse’ than predicted. Full-year results are expected to be ‘materially below current market expectations’. 

Shares fell 11.7 per cent, or 70p, to 530p.

The broker said Joules was suffering from ‘industry-wide pressures’ although they were still optimistic about the company’s medium-term outlook. Shares fell 25.6 per cent, or 50p, to 145p.

The FTSE 100 was down 0.18 per cent, or 12.80 points, at 7218.64 while the FTSE 250 dropped 0.43 per cent, or 96.53 points, to 22550.69. 

Signs of a tightening jobs market resurrected concerns about inflation ahead of the Bank of England’s meeting tomorrow. But a rise in interest rates this week is deemed unlikely as Omicron continues to weigh on the UK economy.

Travel stocks got a lift after Health Secretary Sajid Javid said all 11 countries on the UK’s ‘red list’ will be removed from 4am today. Tourist hotspot South Africa, Angola and Botswana are among the 11.

Shares in British Airways owner IAG jumped 1.7 per cent, or 2.26p, to 132.56p following the announcement, while package holiday firm Tui climbed 2.6 per cent, or 5.5p, to 216.8p, Easyjet inched up 0.8 per cent, or 3.8p, to 507.6p and Wizz Air ascended 1.1 per cent, or 43p, to 4156p.

Banks were on the up after the Bank of England gave the UK’s eight biggest lenders a clean bill of health in its latest stress tests.

Shares in HSBC rose 0.8 per cent, or 3.4p, to 434.7p while Barclays climbed 1.1 per cent, or 1.94p, to 180.08p, Lloyds added 1.9 per cent, or 0.84p, to 45.19p and NatWest nudged up 1.8 per cent, or 3.8p, to 218.2p.

Oil giant Shell bobbed up 0.3 per cent, or 4.4p, to 1619.4p after analysts at Jefferies upped their target price to 2200p from 2000p.

Jet engine maker Rolls-Royce got a mixed reception from brokers, with UBS raising their price target to 145p from 130p while JP Morgan trimmed theirs to 140p from 150p. It inched up 0.2 per cent, or 0.2p, to 117.14p.

Defence firm Chemring posted a rise in profits for the year to the end of October as Roke, its research and development business in Hampshire, passed £100million in orders for the first time. 

Pre-tax profit rose to £48.8million from £43.3million in the prior year, while revenue dipped 2 per cent to £393.3million. It fell 1.9 per cent, or 5.5p, to 283.5p.

Primary Health Properties snapped up the Parkside Medical Centre in Boston, Lincolnshire, for £6.8million, expanding its portfolio to 520 healthcare facilities. It was down 1.3 per cent, or 2p, at 149.1p.

Security group QinetiQ was also under pressure, dropping 1.6 per cent, or 4p, to 246p after JP Morgan downgraded it to ‘underweight from ‘neutral’ over concerns of a slowdown in the US defence market.

Meanwhile, AIM-listed Covid-19 test maker Omega Diagnostics was lifted 7.4 per cent, or 1.8p, to 25.5p after its lateral flow test was able to detect the Omicron variant.

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