In a statement today, Joules explained the company had been in advanced discussions with a number of strategic investors to provide a cornerstone investment in an equity raise process. It had also been in discussions regarding a bridge financing proposal in order to enable continued progress to be made with the said re-financing plans.
Despite this, the board said these discussions with various parties have not been successful and have now been terminated. Reports suggest around 1,600 jobs are under threat as a result.
“Regrettably therefore, the board of Joules has resolved to file a notice of intention to appoint Will Wright, Ryan Grant and Chris Pole of Interpath Advisory Limited as administrators to the company and Joules Limited, and Will Wright and Ryan Grant to The Garden Trading Company Limited and Joules Developments Limited as soon as reasonably practicable,” the company said in its statement.
Joules said the board is taking this action to “protect the interests of its creditors”.
As a result, the Joules board requested a suspension of trading in the company’s ordinary shares on AIM with effect from 7.30am today.
Further announcements are expected in due course.
In a trading update last week, 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.
Retail eCommerce sales were behind expectations for the period on the back of softer eCommerce traffic, though some stores were slightly ahead of expectations.
An inevitable decision
Emily Salter, retail analyst at GlobalData, said: “Joules’ fall into administration seemed inevitable, with it reporting poor performance and being in talks to secure emergency funding. Joules’ recent troubles are in stark contrast to its pre-pandemic performance, as it always outperformed the UK clothing and footwear market due to its loyal shopper base and distinctive product handwriting, but frequent discounting has damaged its brand equity.
“Its reliance on categories such as outerwear and wellies also puts it at the mercy of the unpredictable British weather. The only way forward for Joules now is a purchase – and with potential suitor Next having pulled out of talks in September, this leaves the likes of M&S and Frasers. M&S would be more suitable to secure a solid future for Joules, and it would align with M&S’ aim of boosting its third-party brand presence, while attracting Joules’ core shoppers, who are better protected from the cost-of-living crisis.”
At the end of September Joules moved to assure audiences its turnaround plan was going well in the wake of media speculation it was working with advisory firms on an insolvency plan.