Fashion brand Joules said its profitability is ahead of targets after it made “good progress” with cost-cutting efforts.
Shares in the retailer bounced higher in early trading after investors welcomed news that adjusted pre-tax profits for the past year to May 29 were “slightly ahead of current market expectations”.
Nevertheless, it comes after two profit warnings earlier this year and means its shares are still more than 80% down since the start of 2022.
Joules, which saw chief executive Nick Jones announce his departure in May following the slump in value, said its improved profit position was driven by “additional cost reductions”.
With supportive banks, concerns should start ease
Wayne Brown, Liberum
The company said has made “good progress” in plans to improve its costs, with it benefit from simplifications within the business.
The retailer said this will see the firm focus more on long-term profitable partnerships and reduce its total number of global wholesale accounts, while it also plans to reduce product lead times.
Sales for the past six year are up 8.5% against the same period last year, continuing the trends its saw in its previous update in May.
However, Joules added that it has come under “significant pressure” from customers buying more discounted products amid a “heavily promotional environment” as shoppers seek deals during the cost-of-living crisis.
The retail business also confirmed that its bank, Barclays, has approved £5 million worth of extra headroom on its loans until November to support its needs for the coming months.
Wayne Brown, analyst at Liberum, said: “The strategy to simplify the business is under way and this should deliver long-term profit benefits.
“Prioritising cash over profits make sense and this has helped Joules improve its liquidity headroom position since the interims.
“With supportive banks, concerns should start ease.”