“We’re not necessarily down with the kids but I’m fine with that,” says Tom Joule, founder of the British lifestyle business, as he confirms another year of double-digit sales and profit growth.
“I love the market we’re in – our customer is not too fickle and she becomes a great loyal advocate for the brand. And now we’re continuing to bring in customers from a broader base, which is even better.”
Revenues at the business, established in 1989 in Market Harborough, increased 22% to £117m for the full year to May 31, while EBITDA increased 18% to £10.7m. The year, during which Joules celebrated its 25th anniversary in business in September 2014, followed the previous year’s sales growth of 21% and profit growth of 23%.
“We had a better autumn than most and I think that was down to our 25th anniversary and some clever all-encompassing marketing,” he says.
“Most people had a poor September and October but we rode it out a bit better – we didn’t have a great October but it was OK. Christmas was excellent and the fourth quarter was the best we’ve ever had.”
The fourth quarter ending May 31 saw the business increase its retail-only offer for its 99 UK stores, which is a strategy Joules is looking to grow in future.
“Our wholesale business, which was around £27m this year [up 17% on the previous year], is now big enough to have separate product. Going forward this allows us to do production runs just for wholesale.
“At the moment we probably take two-thirds of our wholesale ranges into retail but we want it to be more like 50% in future.
“This gives us a point of difference and we can also test concepts in retail that we can introduce – with different prints or slightly different styles – into wholesale the next season.”
Joules grew its wholesale business through national multichannel retailers such as John Lewis and Next Labels, as well as a network of independent retailers. It has approximately 500 stockists.
“John Lewis and Next Labels align very well with the brand and we’re doing really well with both, I don’t think we’d be looking to be anywhere else on that scale at the moment.”
He said the company is still “tidying up” its base of independent wholesale stockists, although most of the work is done now. “We have been moving away from people who don’t have the same vision for the brand as us and working harder with those who are more in tune with what we’re doing,” he says.
The company’s retail sales from both its 99 stores and ecommerce grew by 24% during the year. New stores are set to open at Centre: MK, Birmingham Grand Central and Meadowhall later this year, although Joule can’t say which will be the 100th store.
“We would like to celebrate the milestone and make a big deal of it, but it’s not been confirmed which one it’ll actually be yet,” he admits.
“We have been working very well in metropolitan locations and long gone are the days when Joules was just about market towns and coastal locations, although they continue to be very important to us.”
He believes Joules could open another 50 stores in the UK very easily but that the business is in no rush.
“In one year a few years back we opened nearly 20 stores but more like 10-12 is fine. It has to be the right ones for us as a brand,” he says, explaining that locations on the hit list include Inverness and Dublin, as well as a couple of other market towns and coastal areas.
Another area which has been keeping the team busy is the redesign and re-platforming of the Joules website, which is expected to launch in mid-September.
“We have made it a lot cleaner, clearer and easier to navigate, as well as making it easier to order in store and for click-and-collect. It has better photography, better styling and improved link selling,” he says.
Ecommerce and catalogue sales currently account for 34% of retail revenue, which Joule says hasn’t actually grown that much as a proportion of overall sales.
“What we are proud of is keeping it at that level as we have grown the retail portfolio – it is about 23-25% of overall sales within the business, which is quite an achievement and we hope to keep that up with the new site when it relaunches.”
Growing the brand overseas marks the next big frontier for Joules, with international sales increasing by 65% in the last year, against growth of 44% in 2014.
In June, the firm received an additional £11m credit facility secured from Barclays, taking its total facility with the bank to £26m, to fund its further growth in Germany and the US, which present the biggest opportunities for growth in the medium term, he says.
The company brought its German distribution in-house last year and has grown sales in the country since then.
“In Germany, it is lots of independent wholesale customers but in the US, where we’re seeing the fastest growth, we have the real big hitters.
“Following an online trial with Nordstrom, we’re going into stores for autumn 15 and they’ve already confirmed spring 16 orders. We are also dealing with some great shoe and outdoor chains and we’re in talks with retailers like Bloomingdales. We have around 20 serious wholesale customers in the US, and growing.”
In terms of product categories, womenswear remains the biggest part of the business accounting for some 60% of sales, with menswear between 12% and 14%, kidswear 18%, and baby and home making up the rest.
At the end of 2014, Joules launched a partnership with eyewear distributor Mondottica, which works with brands like Ted Baker, Anna Sui, Cacharel and Converse, which Joule says is proving a successful new area for the business.
Now he is preparing for the inevitable roll into the Christmas period and says the autumn 15 season has started well.
“We had a good end to the Sale and our wholesale partners are enjoying some good early signs with the new autumn ranges,” he explains.
When asked whether he will be drawn into discount days such as Black Friday in the run up to Christmas, he says: “We’d be daft not to get involved this year but have we made product specifically for it? No. I see it more as a chance to get rid of some things that haven’t worked as well as well as we’d hoped as a kind of mid-season Sale.”
In general Joule says the brand is relatively sheltered from feeling obliged to discount because “people are very fond of the brand and we are doing well on different levels, which allows us not to feel the pressure like some other businesses”.
“That’s the beauty of multichannel,” he says. “When you have four or five channels and two or three are doing really well, you’re not under the same pressure as if you have just one or two. We’re lucky that our four biggest channels [retail, wholesale, international and ecommerce] are all doing really well.”
The fifth channel, brand extension [such as sunglasses and eyewear] and licensing, is also performing well but is not of a size that could “significantly change the dial”, he says.
The growth of the business has been aided by a £22m investment from LDC, the private equity arm of Lloyds Banking Group, in November 2013. Joules says he has been frequently asked about his intention to float ever since.
“LDC have a minority share so there will be something that happens at some point – it’s always never say never when I’m asked but it’s not at the forefront of my mind at the moment,” he says.
“What I am pleased about is that we are doing what we set out to do when we partnered with LDC by getting international going and through brand extensions. They were the two big unknowns and we’ve ticked the boxes so now it is just about continuing to build on that for the future.”
One thing he is sure of is that he won’t be stepping back from the business anytime soon.
“I love being in the business and I’ll be here for many years to come,” he says.