Shares in country casuals retailer Joules were down a third this morning following news that chief executive Nick Jones is going.
The business also said it was shaking up its wholesale operations including pulling out of the EU and USA next year. Instead it plans to focus on its own websites in the US and Germany.
It is also cutting the amount of products it sources from China, to cut its dependency on that country and improve stock delivery times.
Mr Jones joined Leicestershire-based Joules two-and-a-half years ago having previously worked for George at Asda and Marks and Spencer.
He will stay on until the middle of the year “to ensure a smooth transition” while a replacement is found.
The announcement was made with a trading update saying sales were up almost a third over the last three months although the rising cost of living was making market conditions more challenging.
Management said performance had fallen below expectations in some parts of the business.
Mr Jones said: "Joules is a fantastic brand with great people, loyal customers, and a differentiated product offering.
“Underpinned by the strategic actions we are taking to optimise the business, Joules will emerge stronger and better positioned to achieve long-term, profitable growth."
Non-executive chairman Ian Filby said: "On behalf of the board and everyone at Joules, I would like to thank Nick for his significant efforts over the last three years.
“He has led the business with integrity, care, and energy during what has been a particularly challenging period for the retail sector, including during the Covid-19 pandemic.
"Under Nick's leadership Joules has made good progress against its strategy to develop as a digital-led lifestyle group.
“More recently, he has led the business in implementing a number of important strategic initiatives that will underpin the group's future over the coming years.
"The board will now begin a search process for Nick's successor and will share an update in due course."
Shares in Joules were down 36 per cent this morning at around 35p.
Three months ago the business – which operates out of a new HQ in Market Harborough – said it was expecting profits to be well below forecasts as a result of a fresh Covid hit and rising costs, despite posting decent sales.
Back then it said Covid-related setbacks would see profits of around £5 million this year, compared to the £10 million and £12 million it previously expected. Following that announcement on February 1 shares fell 40 per to 71p. Last June they had been trading at 300p.
In a strategic update today the business said the significant changes to its operations would include introducing higher minimum order quantities from wholesale clients in the UK.
It said: “These changes will drive a significant reduction in global wholesale accounts, enabling the group to focus on long-term, profitable partnerships and to focus on Joules' own e-commerce channels in the USA and Germany.”
Joules also plans to simplify its production processes to cut costs and bring lead times down by up to four months.
It said it had addressed delays with its outsourced distribution channels and was diversifying its “ethically sourced” supplier base to cut its dependency on China by a half.
It said: “In addition to creating a more balanced supplier base, this importantly allows the group to benefit from shorter lead times from countries including Turkey.
“Whilst the group is not currently experiencing significant delays as a result of the latest Covid-19 related lockdowns in China, management is closely monitoring developments and any impact these might have on the group's operations.”
The company added: “Given the trading challenges outlined above, which are anticipated to continue during the first half of FY23 [which starts the end of this month], the board is cautious about its near-term outlook.
“However, underpinned by the continued strength of the Joules brand and the strategic progress already made, the board remains confident in the long-term prospects of the business.”
Russ Mould, investment director at stockbroker AJ Bell, said Mr Jones was leaving the posh welly seller after a “very soggy three years” for its shares.
He said: “Joules’ shares dived sharply once again this morning as it warned on profit and Jones’ position had probably been rendered untenable.
“Not that his successor will be blessed with a strong set of cards to play.
“Household budgets are constrained and while luxury brands serving the very wealthy usually ride out downturns well and cheaper outlets can attract shoppers who are trading down, more premium high street brands look vulnerable.”
