4 May 2022

Joules Group Plc

("Joules", the "Group")

Board, Strategic and Trading Update

Joules, the premium British lifestyle group, provides a board, strategic and trading update relating to the period since its Interim Results on 8^th February 2022, the 13 weeks from 1^st February to 1^st May 2022.

BOARD UPDATE

The Group announces that, after three years with Joules, Nick Jones, Chief Executive Officer, will step down from the role during the first half of the Group's next financial year. Since joining the business in 2019, Nick has helped 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 Board will begin the search for Nick's successor immediately to ensure a smooth transition of responsibilities and will provide a further update at the appropriate time.

STRATEGIC UPDATE

The Group has made good progress against its previously stated plans to simplify the business and optimise the cost base. This includes:  

• Implementing significant changes to its wholesale operations, including exiting the Group's traditional wholesale model in the USA and EU from SS23 onwards and introducing higher minimum order quantities in the UK. These changes will drive a significant reduction in global wholesale accounts, enabling the Group to focus on long-term, profitable partnerships and to focus on Joules' own e-commerce channels in the USA and Germany.
• Improving and simplifying the Group's end-to-end product process to reduce costs and shorten lead times by up to four months, enabling Joules to increase the proportion of newness, and therefore the opportunity for full price sales, within its collections.
• Working collaboratively with the Group's third-party DC provider to enhance efficiencies and resolve operational issues that impacted the peak trading period. DC costs and productivity have now normalised.
• Diversifying the Group's long-standing, ethically sourced supplier base. As a result of developing new supplier partnerships, the Group is on track to reduce its exposure to China to less than 50% of historic levels in AW23. In addition to creating a more balanced supplier base, this importantly allows the Group to benefit from shorter lead times from countries including Turkey. Whilst the Group is not currently experiencing significant delays as a result of the latest Covid-19 related lockdowns in China, management is closely monitoring developments and any impact these might have on the Group's operations.

CURRENT TRADING AND OUTLOOK

Since the Interim Results, the Group has continued to deliver strong revenue growth, of approximately 20% for the 13 weeks to 1^st May 2022. However, as has been well-documented, 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 in the following areas:

• The competitive environment has been increasingly promotional, with customer participation highly dependent on promotional activity and reduced demand for full price items. This has significantly impacted margins through Joules' own channels. 
• Consumer demand for home and garden categories has been subdued, particularly online, with Garden Trading performing significantly below expectations over its peak sales period in March and April.
• Third party sales have 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.

The Group continues to focus on accelerating its plans to improve profitability and cash generation through cost restraint and clearance of aged stock. As at 1^st May 2022, net debt was approximately £22m with liquidity headroom of £11m, in line with expectations.

Given the trading challenges outlined above, which are anticipated to continue during the first half of FY23, the Board is cautious about its near-term outlook. However, underpinned by the continued strength of the Joules brand and the strategic progress already made, the Board remains confident in the long-term prospects of the business.

Nick Jones, CEO of Joules, commented:

"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.

"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."

Ian Filby, Non-Executive Chairman of Joules, commented:

"On behalf of the Board and everyone at Joules, I would like to thank Nick for his significant efforts over the last three years. He has led the business with integrity, care, and energy during what has been a particularly challenging period for the retail sector, including during the Covid-19 pandemic.

"Under Nick's leadership Joules has made good progress against its strategy to develop as a digital-led lifestyle group. More recently, he has led the business in implementing a number of important strategic initiatives that will underpin the Group's future over the coming years.

"The Board will now begin a search process for Nick's successor and will share an update in due course."

Enquiries:

This announcement contains inside information within the meaning of the Market Abuse Regulation. The person responsible for arranging release of this announcement on behalf of Joules is Caroline York, Chief Financial Officer.

Joules - a premium lifestyle group with an authentic British heritage

Joules is a premium lifestyle brand and group with an authentic heritage and values of family, fun and joy in the countryside.

Joules creates and curates exceptional products that brighten the lives of its customers, delivered through leading digital platforms and supported by enticing experiences and stores that are located in desirable locations relevant to the Joules customer's lifestyle. 

The Joules story began in 1989, when Tom Joule started selling clothing on a stand at a country show in Leicestershire. Today, the business designs and sells Joules-branded clothing, footwear and accessories for women, men and children as well as collections of homeware, toiletries, lifestyle and pet product ranges that are carefully designed and developed through selected licensing partnerships. Each collection comprises Joules' distinctive use of humour, colour and unique prints, each of which is hand-drawn by the brand's talented in-house print design team at its headquarters in Market Harborough, Leicestershire.

In 2021, Joules acquired leading digital home and garden retailer The Garden Trading Company, strengthening its position in the important and fast-growing home, garden & outdoor category. Similarly inspired by the British countryside, Garden Trading designs and sells distinctive products through its own e-commerce platform and many wholesale partnerships across the UK.

Joules' distinctive design-led products are complemented by an increasingly broad customer offer provided through its digital marketplace 'Friends of Joules' that enables third-party brands to offer curated, complementary products to the Joules customer base, enhancing Joules' digital platform with thousands of products from hundreds of creative businesses to give customers everything they could ever need for a contemporary country lifestyle.

The Joules group caters to its 1.9 million active customers through its own digital platforms, its retail stores in the UK and at country shows and events. Joules extends its brand reach through well-established third-party relationships - concessions, online marketplaces, and traditional wholesale - in the UK and internationally.

www.joules.com                                                  

www.gardentrading.co.uk                                 

www.joulesgroup.com