TIDMJOUL
RNS Number : 4548F
Joules Group plc
07 November 2022
7 November 2022
This announcement contains inside information within the meaning
of the Market Abuse Regulation.
Joules Group Plc
("Joules", the "Group", the "Company")
Business Update
Joules, the premium British lifestyle group, provides an update
in regard to its turnaround plan, and current trading and financial
position.
Turnaround plan
The Company has made good progress in defining and delivering
its turnaround plan as well as continuing its focus on cost control
and cash management. Key initiatives are now developed and
implementation is underway including:
-- Wholesale simplification and the exit from EU and US territories near completion;
-- New leaner, simpler organisation and leadership structure now in place;
-- Channel cost and margin optimisation changes to be complete by December;
-- Revised trading, promotion and buying execution approach well underway; and
-- Changes to product process and sourcing model all complete.
Under the leadership of Tom Joule, in his capacity as Product
Director, a new product design and development process is in place
to drive further substantial improvement in product quality and
design.
Current trading and financial position
Current trading
Since its previous trading update, the Group has seen the
continuation of the trends highlighted in the 19 August trading
statement. Active customers are in growth, and brand health and
awareness KPIs, which reflect consumer perception of the brand,
have remained strong. However, trading overall for the 11 weeks to
30 October 2022 (the "period") has been behind the Group's
expectations. The Group believes this, in large part, reflects the
challenging UK economic environment which has negatively impacted
consumer confidence and disposable income. In addition, whilst
dresses, menswear and more formal product categories have performed
well, larger core categories such as outerwear, wellies and
knitwear have been impacted, in part, by the milder than expected
weather.
Retail ecommerce sales have been behind expectations for the
period, particularly due to softer ecommerce traffic, driven by the
reasons mentioned above. Stores sales have been slightly ahead of
expectations.
Retail margins have benefitted from the positive impact of the
Group's improved pricing and delivery proposition, however this has
been offset by the high levels of promotional activity across the
market, leaving overall retail margin performance slightly behind
expectations.
UK wholesale for the Joules brand has performed well and has
been in line with expectations, however wholesale performance
overall has been impacted by underperformance across Garden Trading
and US wholesale. Friends of Joules continues to perform well, with
updates to its proposition further leveraging its appeal .
Financial position
The Company has previously announced that it is assessing its
ongoing financing requirements, including a possible equity raise,
to allow the Company to strengthen its balance sheet and provide a
strong platform to support the turnaround plan. Since this
announcement, the Company has advanced discussions with a number of
strategic investors, including Tom Joule, to provide a cornerstone
investment in an equity raise. Furthermore, the Group is continuing
to progress alternative options with the assistance of Interpath
Advisory, including CVA planning, in conjunction with the equity
raise referred to above. It is the Group's intention to commence
consultation with key stakeholders, including suppliers, on the
turnaround plan including potential alternative options, should
they be required.
The Company also remains in discussions with its lender in
relation to a waiver of certain financial covenants in its existing
facilities and on its medium-term financing, including a review of
covenants, to support the turnaround plan.
The trading underperformance mentioned above has resulted in the
Company's working capital position being below expectations. Net
debt at the end of October was GBP25.7m with headroom of GBP11.4m.
However, this headroom is reduced by GBP5.6m of 'trapped cash'
(i.e. cash held in transit by payment providers etc) and would also
be reduced by repayment of the GBP5m short-term RCF ("STRCF"), due
for repayment on 30 November 2022. The Company is currently in
discussions with Tom Joule and its lender in regard to a bridge
financing proposal in order to enable continued progress to be made
with the re-financing plans referred to above. However, there can
be no certainty that any bridge financing proposal will be agreed,
nor as to its terms, in which case the Company expects it would be
unable to repay the STRCF on its due date for repayment.
A further announcement will be made as and when appropriate.
Enquiries:
Joules Group plc Tel: +44 (0) 1858
435 255
Jonathon Brown, CEO
Caroline York, CFO
Hudson Sandler (Financial PR) Tel: +44 (0) 20
7796 4133
Alex Brennan
Lucy Wollam
Peel Hunt LLP (NOMAD and Joint Broker) Tel: +44 (0) 20
7418 8900
George Sellar
Andrew Clark
Liberum Capital Limited (Joint Broker) Tel: +44 (0) 20
3100 2000
John Fishley
Edward Thomas
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.
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END
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