Joules Group is strategically focused on the multi-channel distribution of its distinctive aspirational own brand to a loyal and growing active customer base. It has a significant opportunity to grow international market share via wholesale partners and its online platform. The company has been consistently delivering results ahead of market expectations and consensus revenue forecasts for FY19 and FY20 appear undemanding.
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Joules Group |
Energy for expansion
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General retail |
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2 May 2018 |
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Joules Group is strategically focused on the multi-channel distribution of its distinctive aspirational own brand to a loyal and growing active customer base. It has a significant opportunity to grow international market share via wholesale partners and its online platform. The company has been consistently delivering results ahead of market expectations and consensus revenue forecasts for FY19 and FY20 appear undemanding.
A loyal and growing active customer base
Joules is an aspirational brand, renowned for colourful, family-oriented apparel and homeware ranges that are targeted at a broad and increasingly international demographic. What sets the company apart from its peers is a relentless focus on customer engagement, which it is using its distinctive product ranges and a strategic focus on multi-channel distribution to achieve. At H118 the group had grown its active database by 18% y-o-y to 1.1 million customers.
Creating a strong international platform
Joules Group is a growth company with a significant opportunity to increase market shares overseas. International currently represents 11.3% of group revenue and is focused on wholesale distribution in the US and Germany, supported by dedicated websites for each market. The recently expanded sales and marketing team in New York has brought brand distribution to over 600 independent stockists in-house. As the brand becomes better established in these markets, we see a compelling opportunity to develop the web platforms for higher margin online sales.
The strategy is proving effective
The group has been defying wider macroeconomic uncertainties, consistently delivering double-digit sales growth across all channels and has a track record of beating market expectations. In our view, the 12% y-o-y revenue growth consensus for both FY19 and FY20 appears undemanding, set against current-year consensus projections of 18% growth and the strategic opportunity for expansion.
Premium justified
The shares trade on a 27.1x forward P/E (apparel peer group 17.8x). As with any high growth company, there is execution risk; however, Joules has a robust strategy with a compelling international opportunity, £3m of net cash (end H118) and there is potential for future upgrades to consensus forecasts. Thus a premium to the peer group appears justified, and is supported by an in-line 1.5x EV/sales multiple.
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Consensus estimates
Source: Bloomberg |
EDISON QUICKVIEWS ARE NORMALLY ONE OFF PUBLICATIONS WITH NO COMMITMENT TO WRITING ANY FOLLOW UP. QUICKVIEW NOTES USE CONSENSUS EARNINGS ESTIMATES.
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Disclaimer
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Disclaimer
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Research: TMT
mVISE is a fast-growing German IT firm with a focus on the high-demand area of digital transformation. Management has been active over the last 12 months with the highly promising autumn 2017 acquisition of a consulting business of SHS Viveon, new marketing partnerships with Magic Software and Deutsche Telekom to sell the elastic.io platform and a new Strategie 2018+. Helped by this, we believe the group is well placed to achieve its three-year target of doubling revenue and c 7pp EBIT margin expansion through higher sales of high-margin products, employee efficiencies of scale and increased pricing power.