(Reuters) -British fashion retailer Joules warned of an annual loss on Friday and said it expects to need a waiver on some debt covenants, triggering a 34% slide in its share price.
Joules, which is struggling with its finances, profitability and cash generation as cautious consumers spend less due to surging inflation, said recent heatwaves had hit sales, which were down 8% in the first 11 weeks of its financial year.
It added that high levels of discounting and a shortfall in full price sales had led to a drop in its retail margins in recent weeks, although it expects a partial recovery in the coming months from its autumn and winter collections.
The company said “positive” talks with bigger retailer Next Plc over a potential equity investment of about 15 million pounds ($18 million) were ongoing.
Joules’ outlook contrasted with Next’s, which earlier this month lifted its sales and profit forecasts and said that the hot weather had encouraged spending on clothes.
Liberum said it expects a 10% drop in Joules’ underlying retail sales, compared with expectations of a 3% rise earlier, as the hot weather “compounded the ongoing subdued consumer demand due to the well-documented cost-of-living crisis”.
($1 = 0.8398 pounds)
(Reporting by Muhammed Husain in Bengaluru; Editing by Uttaresh.V and Alexander Smith)
