// Joules warns on profits citing disruption from the Omicron variant and supply chain issues
// Bosses said that, as a result, prices of items in its spring-summer collection will be higher for customers
High street fashion retailer Joules has said sales are up but warned that extra costs mean profits will be well below those predicted after it suffered a series of Covid-related setbacks.
The move comes despite revenues for the nine weeks to January rising by 31%, against the previous year and 19% on a two-year basis.
Profits had been due to hit between £10 million and £12 million, but bosses said they will now come in at around £5 million.
The retailer said it was affected by reduced footfall as customers stayed away due to the rise in the Omicron variant – down 36% on the same period before the pandemic.
There were also delays to new stock arrivals due to global supply chain challenges, leaving fewer full-price products available and hitting profit margins.
Sales to third parties in wholesale agreements took a subsequent knock due to the delays, and customer orders were cancelled.
Meanwhile, profits were also hit by rising costs in freight, duties and distribution.
The retailer’s distribution centre costs more than doubled, and were £1.2 million above expectations, while wage costs were also higher – although they have since reduced.
As a result of all the headwinds, Joules said there would be “selected appropriate” price increases for the summer spring 2022 collection.
They will also rein in costs for marketing, at head office and on upgrades to stores.
Older stock will be sold off cheaply through third parties via outlet stores, while Joules’ wholesale operation will be simplified.
The retailer confirmed that revenues in the six months to November 28 were £127.9 million, up from £95.4 million a year earlier, with underlying pre-tax profits of £2.6 million.