British Clothing Retailer Joules Drops 41% on Profit Warning

(Bloomberg) --

Joules Group Plc shares plummeted after the British retailer joined a growing list of companies to warn that supply chain issues and Covid infections are hurting earnings.

The stock dropped 41% in early trading in London Tuesday, the most on record. The company has faced stock delays, rising freight costs and fewer customers visits to stores due to the latest strain of the virus. Profit for the nine weeks through Jan. 30 was weaker than expected, according to a statement.

Joules said it aims to cut costs and simplify the business to improve profit margins. The company delayed reporting its interim results today and said it's completing a “going concern analysis.” Joules has 21.5 million pounds ($29 million) of net debt and has “sufficient liquidity headroom” for the foreseeable future, the company said.

Joules started out as a clothing stall at a country show in Leicestershire in 1989 and has since grown to 125 stores across the UK with a growing presence in the U.S. and Canada. The company has an in-house print design team in Leicestershire that hand draw the colorful prints for its own-brand clothing and homeware loved by equestrian types.

“While this is clearly disappointing after December's downgrade, management has taken steps to simplify the group, streamline costs and improve margins,” said Wayne Brown, an analyst at Liberum, in a note to clients.

Peel Hunt, which acts as the company's corporate broker, cut its recommendation on the shares to hold from buy. Analysts at the firm also lowered their price target to 110 pence from 275 pence.

Joules shares were trading at 70 pence as of 9:12 a.m. in London.