Our bullish stance on Joules (JOUL:AIM) - see Great Ideas, 01 Dec 2016 – has proved an astute call, shares in the premium British lifestyle brand now 62.4% up on our 185p entry price at 300.4p.

In a sparkling pre-close trading update (6 June), Joules said full year profit before tax would be ‘comfortably ahead’ of expectations thanks to strong sales growth and improved gross margins, the latter helped by higher full price retail sales and a growing proportion of clothing sales within wholesale accounts.

The update triggered a further round of earnings upgrades for the clothing, bedding and wellington boots seller. Joules’ heady growth reflects a compelling combination of expansion in the UK
and international markets, strong online growth, better-than-expected store sales and positive customer responses to both new and core ranges.

Liberum Capital argues forecast risk is still on the upside and remains a buyer, upgrading its price target from 335p to 350p. While the economic outlook is indeed uncertain, Liberum believes ‘Joules has been a beneficiary from the ‘staycation’ theme, as UK residents may increasingly holiday at home due to the pound’s weakness. This could well be supported by Joules’ rural and seaside store locations, providing a smoothing of revenues and driving an incrementally strong performance over summer 2017.’

We’re staying positive on Joules given the likelihood
of further upgrades.

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