Joules pulls away from EU trade as Brexit costs bite hard

Joules, which issued a profit warning last week and reported a decline in pre-tax interim profits yesterday (February 8), said that the business was hit hard by increased freight costs, distribution centre issues and Brexit-related import duties.

To tackle these issues and turn the business around, Joules has drawn up plans to simplify its business, including reducing its wholesale exposure and doubling down on its UK arm.

Joules chief executive Nick Jones told Retail Week that the brand will be moving away from using EU agents to stock with partners on the continent.

“From Autumn/Winter 2022, we won’t be stocking through those agents,” he said.

“Some of the biggest stockists there we will deal with directly. It’s not about not seeing Europe as an important opportunity going forward, it’s just making sure that we can do it with the impacts of duties and Brexit challenges, that we can do it with a sensible return.

“We’ll therefore be strongly focusing on our third-party digital partners, which are Zalando and Amazon, and our own ecommerce site in Germany, where we deliver strong revenue growth, and build on those.”

The news comes as a report from parliament’s spending watchdog, the Public Accounts Committee (PAC) revealed that it was “clear” that Brexit is having a negative impact on UK businesses, who have had to deal with “increased costs, paperwork and border delays”.

The report said that the impacts of Brexit have in fact emerged as the opposite of its promise to free “British businesses to give them the headroom to maximise their productivity and contribution to the economy”.

Brexit-related costs and delays are just one of the issues facing retailers are the moment. Jones told Retail Week that the retailer is prepared for freight costs to stay high over the coming months, while the retailer is also implementing price hikes.

He added: “We haven’t moved prices for a number of seasons. We keep a close eye on what the competition are doing, and we’re very mindful of where we are so we’re happy to move on some selected prices.

”It’s not going to challenge our value proposition. We will look at it on an ongoing basis, and in the context of the competition on the market.”