Joules shares plunge after news of CEO departure and ‘more challenging’ market
Joules has seen its share price plummet after news of CEO Nick Jones’ exit and pointing to “more challenging” market conditions this spring.
Shares had plunged 24 per cent on Wednesday afternoon after the retailer Jones would remain at the helm until the middle of the year “to ensure a smooth transition” while a replacement is found.
The premium British lifestyle group posted strong revenue growth, up 20 per cent for the quarter ending 1 May. Net debt was approximately £22m with liquidity headroom of £11m, in line with expectations.
However, in the trading update, the retailer said: “Market conditions have become more challenging during and following the Easter period as consumer confidence has been impacted by the rising cost of living”.
“Joules has not been immune to these sector-wide pressures, which have led the group’s profit performance to fall below management’s expectations”, it added.
“Joules’ shares dived sharply once again this morning as it warned on profit and Jones’ position had probably been rendered untenable. Not that his successor will be blessed with a strong set of cards to play,” AJ Bell investment director Russ Mould said.
The analyst 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.”
Indeed, consumer demand for home and garden categories had been subdued, particularly online, with Garden Trading performing significantly below expectations over its peak sales period in March and April.
Third party sales have also been weaker than expected across a number of key UK accounts. US wholesale sales have remained below expectations due to stock delays and lower demand.
On top of this, customer participation has been highly dependent on promotional activity and reduced demand for full price items. This has significantly impacted margins through Joules’ channels.
CEO Nick Jones said: “Building on the strategic progress made so far, over the coming months we will continue to deliver against the clear priorities that the Board and I believe will create a strong foundation for Joules to achieve its significant long-term potential, as well as helping the business to navigate the current challenging trading environment.”
Jones is leaving after three years, after helping Joules to navigate through an unprecedented trading environment, particularly during the Covid-19 pandemic.
During his tenure, Joules has achieved several key strategic milestones including the launch and expansion of Friends of Joules and the growth of the Group’s active customer base and brand awareness to all-time highs, the company said.