Joules : FY Results

Joules Group plc

('Joules' or the 'Group')

Annual Results for the 52-week period ended 30 May 2021

('the Period' or 'FY21')

Strong performance underpinned by continued digital growth, the strength of the Joules

brand, and increasing diversification of revenue streams

FY21 performance:

• Group revenue increased by 4.3% to £199.0 million (FY20: £190.8m) with strong e-commerce sales growth and the contribution from Garden Trading1, more than offsetting the impact of enforced store closures, the cancellation of country shows across the UK and the impact of the pandemic on the Group's wholesale customers.
• • E-commercesales increased by 48% to £122.0 million (FY20: £82.7m). Excluding the acquisition of Garden Trading2, e-commerce sales increased by 43%. This growth was led by sales through the Group's own websites3. E-commerce represented 77% of the Group's retail revenue during the Period (FY20: 56%).
  • Overall store and shows sales were £36.6 million in the year (FY20: £63.2m). This performance reflects the forced closure of non-essential retail stores, and cancellation of shows and events as a result of COVID-19. In the Period, our stores were closed for approximately six months of the Period compared with two months in the prior year.
  • Wholesale revenue in the Period, including Garden Trading2, was £35.3 million, a 17% reduction year- on-year (FY20: £42.7m), reflecting the ongoing impact of COVID-19 on many of the Group's wholesale partners both in the UK and internationally.
  • Other revenue more than doubled to £5.1 million (FY20: £2.2m). This reflects the strong growth of our Friends of Joules digital marketplace and strong performance from several of our licensed product categories and partnerships.
• PBT4 before exceptional costs was £6.1 million (FY20: loss of £3.9m).
• Exceptional costs in the Period totalled £4.2 million (FY20: £21.0m) including a £2.9 million (FY20: £20.5
  million) non-cash impairment charge, £0.6 million (FY20: nil) Garden Trading acquisition costs and £0.7 million
  (FY20: £0.5m) restructuring costs.
• Statutory profit before tax was £2.0 million (FY20: loss of £24.8m).
• Statutory profit after tax was £0.9 million (FY20: loss of 20.3m).
• Group gross margin was 49.0%, down 1.7%pts on the prior year, impacted by a lower proportion of higher margin store sales, increased freight costs and increased duty and transportation cost for deliveries into EU markets following Brexit.
• Basic earnings per share was 0.82 pence (FY20: loss of 21.61 pence).
• 1.7 million active customers5 (FY20: 1.41m) and record brand awareness and brand health6 metrics achieved during the final quarter of the year.
• Net cash7 of £4.1 million (FY20: £4.5m).

Nick Jones, Chief Executive Officer of Joules, commented:

"It is safe to say that FY21 was characterised by truly unprecedented trading conditions. Against this backdrop, the Group delivered strong strategic progress, including growing our digital proposition, increasing our active customer base, and further diversifying as a leading lifestyle platform with the successful acquisition of Garden Trading and the continued expansion of Friends of Joules.

At the centre of our growth strategy remains the strong Joules brand. During the year we continued to deliver on our brand's clear mission and purpose - to brighten our customers' lives and conduct business in a responsible way. As more and more consumers increasingly valued their leisure time spent outdoors and time doing the things they enjoy with the people they love, our brand has become increasingly relevant to a greater number of customers, reflected by brand health metrics reaching all-time highs.

The Group's strategic progress would not have been possible without the hard work, flexibility and, above all, dedication of our outstanding team. I am incredibly proud of, and grateful for, the commitment shown by our people, from our head office teams to those on the front line in our stores, during this challenging period.

As we move into the new financial year, the continued success and growth of Friends of Joules and our strengthened position in the home, garden and outdoor sector means that the Group now offers significantly more products and categories than ever before, therefore providing customers with greater choice and more reasons to shop with us. As a result of the strength of the Joules brand and the increasing diversification of the Group's digital- led business model, we believe that the Group is very well positioned to continue to deliver its ambitious growth plans."

Reconciliation to statutory profit/loss before tax:

£million	FY218	FY20
		(restated)9
PBT/(LBT) - before exceptional costs4	6.1	(3.9)
Exceptional costs	(4.2)	(21.0)
Statutory profit/(loss) before tax	2.0	(24.8)

1. On 9 February 2021 the Group acquired 100% of the issued share capital, and obtained control of, The Garden Trading Company Limited (company number 2854160). The Garden Trading Company Limited is a digitally focused retailer of home and garden products. See Note 2 of the Consolidated Financial Statements.
2. Garden Trading e-commerce revenue in the period since acquisition to 30 May 2021 was £4.3 million, and wholesale revenue was £4.4 million.
3. joules.com, joulesusa.com, tomjoule.de and the Joules ebay store
4. PBT/(LBT) - before exceptional costs is a non-GAAP measure provided to facilitate comparison across periods, it is stated prior to exceptional costs that are primarily related to non-cash asset impairments in the current and previous periods. See Note 3 of the Consolidated Financial Statements.
5. Customers registered on our database who have transacted in the last 12 months.
6. Brand Awareness and Brand Health are measured as part of an independent YouGov consumer survey.
7. 'Net cash' represents gross cash & cash equivalents less total borrowings. See Note 12 of the Consolidated Financial Statements.
8. This year, we are reporting on the 52 weeks ended 30 May 2021 compared to 53 weeks to 31 May 2020 in the prior year. To provide a comparison with last year's 53-week period, the unaudited contribution of the additional week in last year's results was approximately 1% of revenue and profit.
9. For further details of the prior period restatement, refer to the Financial Review section of this report, and Note 1 of the Consolidated Financial Statements.

Enquiries:
Joules Group plc	Tel: [phone]
Nick Jones, CEO
Jon Dargie, Interim CFO
Hudson Sandler (Financial PR)	Tel: [phone]
Alex Brennan
Lucy Wollam
Peel Hunt LLP, Nominated Advisor and Joint Broker	Tel: [phone]

George Sellar
Andrew Clark
Liberum Capital Limited, Joint Broker	Tel: [phone]
John Fishley
Edward Thomas

Joules - a premium lifestyle group with an authentic British heritage

Joules is a British lifestyle Group comprising the Joules brand, the fast-growing Friends of Joules digital marketplace, and Garden Trading, a leading digital-led brand in the home, garden and outdoor category.

The Joules brand is a premium lifestyle brand with an authentic heritage and values of family, fun and joy in the countryside. Joules creates exceptional products that brighten the lives of its customers, delivered through leading digital platforms and supported by enticing experiences and stores that are situated 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.

The Joules brand caters to its 1.7 million active customers through its own digital platform, 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.

Joules' distinctive design-led products are complemented by an increasingly broad customer offer provided through its digital marketplace Friends of Joules. The Friend of Joules platform 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.

In 2021, the Group increased its presence across complementary lifestyle categories, including the important and fast-growing home, garden & outdoor category, through the acquisition of leading digital home and garden retailer The Garden Trading Company Limited. Similarly inspired by the British countryside, Garden Trading designs and sells distinctive products through its own e-commerce platform and wholesale partnerships with more than 1,000 stockists across the UK.

www.joules.com

www.gardentrading.co.uk

www.joulesgroup.com

CHAIRMAN'S STATEMENT

INTRODUCTION

In my Chairman's Statement in the Group's FY20 Annual Report, which was published during the first wave of the coronavirus pandemic, I outlined Joules' initial responses to the unprecedented challenges facing the retail sector. I also expressed my confidence that the relevance of the Joules brand, the flexibility of our business model, and the strength of the Group's financial position meant that Joules was well positioned to withstand the pressures of the pandemic and emerge an even stronger brand and business. Whilst we are not through the pandemic yet, and significant levels of uncertainty persist, the Group's performance and progress over the past 12 months has only strengthened my confidence in these convictions.

I am incredibly proud of how the business has adapted in the face of this most testing of circumstances over the last 18 months. During this period, the Group has evolved significantly into a digital led, increasingly diversified lifestyle Group. Whilst the Joules brand continues to sit at the centre of the Group, we now operate a second, very exciting brand in Garden Trading, and our Friends of Joules digital marketplace means that we now sell more than 400 other carefully curated brands to our growing customer base, thereby replicating the experience of a bustling market town through the Group's digital channels. This strategic progress and performance during the year is a great testament to the skill, decisiveness, and hard work of our outstanding management team, as well as the forward-looking investments made over many years in the Group's people, product offering, infrastructure, and technology.

FY21 PERFORMANCE OVERVIEW

FY21 Group revenue of £199.0 million (FY20: £190.8 million) and PBT before exceptional costs of £6.1 million were ahead of the Board's initial expectations (see Note 4 of the Consolidated Financial Statements). This pleasing set of results primarily reflects the strong performance of the Group's digital proposition whilst the store estate was closed for approximately six months of the year, and the Group's growing active customer numbers. Joules is an increasingly digital brand, with 77% of retail revenues generated from digital channels in the year. The Group's strong online proposition continues to be supported and complemented by a portfolio of attractively located stores, as well as relationships with selected retail and wholesale partners both in the UK and internationally.

Joules' active customer base, a key metric for the Group, continued to grow and now stands at nearly 1.7 million customers (excluding Garden Trading). This increase reflects the relevance of the brand and its products, effective digital marketing investment, and enhanced levels of brand awareness and engagement.

E-commerce sales during FY21 (the 'Period') increased by 48% against the prior year. This growth reflected a 47% increase in customer traffic to the Joules websites as well as improved customer conversion trends. The strong digital performance continued the momentum delivered in the final quarter of FY20 and was made possible by the Group's strategic investment in its technology platform, which includes the fast-growing Friends of Joules digital marketplace, and enhancement of fulfilment capabilities over recent years.

In addition to successfully driving growth through both the Joules platform and our digital and retail partnerships, the Group further strengthened and diversified its digital proposition and product offer through the acquisition of The Garden Trading Company Limited ('Garden Trading') in February 2021. Garden Trading designs and sells distinctive home, garden and outdoor products through its own digital platform and through more than 1,000 stockists across the UK. Both businesses enjoy a close cultural alignment and the acquisition strengthens Joules' position in the fast-growing home and garden category.

The impact of the pandemic on the Group's performance was most profoundly felt across the store, wholesale and shows channels. Joules stores were closed for approximately half of the 52-week Period, and, when open, experienced lower footfall levels than the prior year largely due to physical distancing practices. This was a similar story for many of our wholesale partners in the UK and in our targeted international markets of Germany and the US. All major country shows and events that the business usually attends during the year were also cancelled. The Group was able to mitigate the impact by increasing its digital sales, careful cost management, and utilising support schemes such as the UK Government's Coronavirus Job Retention Scheme (c.£4.6 million of claims in the Period) and business rates relief (c.£2.3 million of rates relief in the Period). In addition, the Board is very grateful for the flexibility and support of other stakeholders including employees, landlords and other key suppliers including Clipper in the UK distribution centre, stock suppliers across our supply base and many other key partners, during the year.

The Group has maintained robust financial discipline through the Period with a strong focus on cash, liquidity and cost control, whilst also maintaining investment in the areas that the Board believe will drive growth over the coming years. The Group had net cash of £4.1 million at the Period end (FY20: £4.5 million). In April 2021, the Group extended the term of its financing facilities with Barclays Bank PLC through to September 2024, taking the opportunity to convert the arrangement to an 'ESG - Sustainability' facility linked to the achievement of specific sustainability targets, providing further confidence in the financial position of the Group alongside focus and importance of the 'Responsibly Joules' strategy.

The Financial Review provides more detail on the Group's financial performance during the year.

DIVIDEND

As a result of the challenges impacting the Period and the continued increased levels of uncertainty facing many consumer sectors, the Board has determined that it would not be appropriate to declare a dividend for the Period. The Board will continue to review the financial position of the Group within the context of the external environment and intends to recommence dividend payments when it is financially prudent to do so.

BOARD OF DIRECTORS

Marc Dench, the Group's Chief Financial Officer ('CFO'), stepped down from his position on the Board on 11 May 2021 following more than five years with the Group. Marc made a significant contribution to the success of the business since its IPO, helping to drive the Group's transition to the digital-led brand it is today. He also played a critical role over the past 12 months in helping Joules to navigate the impact of the COVID-19 pandemic. On behalf of the Board, I would like to place on record our sincere thanks to Marc for his immense skill and leadership during his time with the Group. We wish him every success in the future.

In April 2021 we were delighted to announce the appointment of Caroline York as Marc's successor following a thorough search process. Caroline joined Joules on 26 July 2021 from Moneysupermarket Group Plc, the FTSE250 price comparison business, where she was Finance Director. Prior to Moneysupermarket, Caroline held finance leadership positions at Heathrow and BAA and before that, held roles at Atos, KPMG and PwC. Caroline's extensive experience in senior finance roles at strong consumer brands and digital-led businesses, as well as property-related businesses, made her the stand-out candidate for the role and the Board is delighted to welcome her to the business.

In the period between Marc standing down from the Board and Caroline joining the Board, the Group appointed Jon Dargie, the Group's Finance Controller, as Interim CFO. During this period, Jon reported directly to the Joules Board.

In our FY20 Annual Results we announced that the role of Tom Joule, Founder and Chief Brand Officer, would be evolving with a reduced working pattern and a primary focus on supporting some of the Group's business development initiatives, such as the establishment of Friends of Joules and acquisition of Garden Trading. During the Period, Friends of Joules has grown significantly, and the initial integration of Garden Trading into the Group has been completed successfully. The Group today announces that, effective from September 2021, Tom's role will reduce to primarily focus on his responsibilities as a Non-Executive Director of the Group. In addition to his Board responsibilities, Tom will continue to provide an advisory role in relation to some of the Group's business development initiatives, with a total anticipated time commitment of approximately one day per week.

OUTLOOK

The Group has entered FY22 in a strong position with an increased and growing active customer base and brand health metrics for Joules at all-time highs. Since the start of the new financial year, the Group has traded in line with the Board's expectations.

Our Retail channel, comprising e-commerce, stores, and shows, has continued to perform well reflecting demand for the Joules brand and the attractive locations of our stores. The Group's home, garden and outdoor ranges - mainly sold under the Garden Trading brand - have performed well and demonstrate the increasing diversification of the Group's revenues.

Wholesale revenue, as anticipated, is lower than pre-pandemic levels. The Board expects wholesale activity to return to more normal levels over the course of the next 12-18 months.

Country shows and events are restarting gradually, and we expect to be back to a normal calendar of events in the coming months.

We look forward with optimism as normality returns to the markets and channels in which we operate. However, we remain vigilant of the potential for further external challenges including possible disruption to international freight over the coming financial year, and the ongoing impact of the pandemic.

Joules is a very strong, differentiated, and highly relevant business that the Board believes is well-positioned to meet consumers' evolving priorities and shopping preferences. In addition, the Group has a robust financial position, well-invested operations, and a clear strategy to continue to expand and grow customer numbers both in the UK and priority international markets.

Over the last 18 months the Group has broadened its product offer, accelerated its digital commerce capability, and scaled several new attractive revenue streams - including Friends of Joules, product licensing and the home,