As part of the deal, Next said it intends to keep 100 of 124 Joules store locations, “a positive outcome”, GlobalData apparel analyst Pippa Stephens says, and one we may not have seen under the ownership of other contenders like Frasers Group.
In addition, Next has acquired the current Joules head office for GBP7m cash, it announced in a stock exchange filing today.
Last month, Joules appointed administrators following the suspension of trading on the AiM stock exchange.
In a recent update, Joules said trading in the 11 weeks to 30 October was “below expectations” on the back of a challenging UK economic environment, which the retailer said dampened consumer confidence and impacted disposable income.
Next said it intends to continue to operate a significant number of stores (around 100 of the current 124 Joules’ stores) in the UK and Ireland, subject to agreeing terms with landlords. 19 stores will be closed by the administrator today. Next will own 74% of the equity with the remaining 26% owned by Tom Joule.
Joules will retain its management autonomy and creative independence. The company will have its own Board of Directors and continue to be based in Market Harborough. Most Joules staff will remain with the business and Joules will migrate onto the Next Total Platform in early 2024.
Stephens explains that the retention of stores will make it easier for the retailer to maintain awareness and showcase its unique brand identity than if it were to operate predominantly online. Next’s customer base also overlaps significantly with the typical Joules shopper, making it well placed to repair Joules’ brand image, which has gradually deteriorated in recent years. By integrating the brand onto Next’s Total Platform, it will also have greater scope to capitalise on the ongoing outperformance of the online channel.
Tom Joule, who founded the company in 1989, will, as product director, take the lead in “re-establishing the clear identity of both brand and product that has been at the heart of Joules’ success over the last 30 years,” said Next.
Jonathon Brown was appointed CEO of Joules in 2022 and will remain in that role.
The company will benefit from Tom’s understanding of the Joules brand, customer and product direction that served Joules so well historically and from Next’s Total Platform, to bring operational efficiency to the newly formed business.
Simon Wolfson, Next chief executive said: “We are excited to see what can be achieved through the combination of Joules’ exceptional product, marketing and brand building skills with Next’s Total Platform infrastructure.”
Tom Joule added: “After three years away from the operational side, I’m truly looking forward to inspiring teams with clear direction to excite and recapture the imagination of the customer again. Our customers have always trusted us to lead, not follow, with products that reflect their lifestyle. It’s important that we live up to the high standards they desire in design, quality and, with Next’s Total Platform delivery and customer support proposition, the service they expect. I’m so pleased that we have been able to strike a deal that protects the future of the company for all its loyal customers, its employees and also for the town of Market Harborough, which have been so central to Joules’ success.
“Will Wright, head of restructuring at Interpath Advisory and joint administrator, said: “We are pleased to have concluded this transaction which secures the future of this great British brand, as well as safeguarding a significant number of jobs. To have achieved this in such a short timetable is testament to the support we’ve received from employees, suppliers and other key stakeholders throughout the administration process, so we’d like to express our profound thanks to everyone involved.”
“While Joules was an outperformer in the UK clothing & footwear market prior to the pandemic due to its loyal customer base and unique product handwriting, frequent discounting has damaged its brand equity, so Next must primarily focus on driving full price sales to help it regain appeal,” believes Stephens. “However, to cement its place in the market, it also needs to ensure it can justify these prices, especially in the context of the cost-of-living crisis. It must refresh its product ranges to be more modern and inspiring, while maintaining its distinct handwriting, which it will find it much easier to do now that founder Tom Joule is back in a creative role.”