Joules calls in administrators as investment talks collapse

Embattled Market Harborough lifestyle brand Joules has collapsed into administration after talks over an equity raise were “terminated”, the firm announced this morning (14 November).

The fashion retailer said it was in “advanced” discussions with a number of strategic investors including its founder Tom Joule last week, but confirmed today that the talks had broken down, leaving it with no other option than to call in administrators.

Declining sales and spiralling costs have led Joules to consider a number of potential options in recent months, including a CVA that could ultimately mean store closures and job cuts.

Just seven days ago the firm insisted its turnaround plans were making “good progress” but its share price plummeted for the seventh time this year off the back of the announcement.

Joules has now 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 and Joules Developments Limited “as soon as reasonably practicable.”

In a statement, the firm said its board had made the decision “to protect the interests of its creditors”, with further announcements expected “in due course.”

The company requested that its shares be suspended from trading on AIM with effect from 7.30am today.

Russ Mould, investment director at AJ Bell, said that while Joules’ troubles have been well-documented, it was still a “jolt” to see the firm collapse.

He said: “As a business Joules is now less a posh welly and more an old boot with a hole in it. The retailer has been struggling for some time, but it is still a jolt to see it enter administration.

“Lots of things have led us to this point, with the failure of Next to come to the rescue the straw that broke the camel’s back, but ultimately Joules’ proposition wasn’t robust enough to withstand such a bleak economic backdrop.

“Joules is neither a luxury brand nor does it offer compelling value and the premium high street space looks particularly vulnerable in an environment when there is so much pressure on household budgets.

“This has been compounded by some poor decision making, unhelpful weather – though blaming the weather is never a great look for a business – and supply chain problems.

“Joules’ cash and stock management have also been far from perfect, though it is fair to acknowledge the current storm would have tested even the most robust balance sheet.

“Shareholders look set to be left with nothing, though they have had a fair amount of warning of this outcome given the precipitous slide in the Joules share price since the start of the year.”

Mould added that Next and Frasers look like “logical suitors” for the brand due to their “relatively robust position and recent habit of hoovering up assets from failed retail businesses,” but that its destiny “remains up in the air.”