Troubled fashion and lifestyle retailer Joules has admitted it may have to enter a special form of insolvency as it seeks to turn around its fortunes in the face of weakening consumer demand.

The company confirmed its “potential options” include a Company Voluntary Arrangement (CVA) which would pave the way for store closures, rent reductions and job cuts across its chain of approximately 130 stores in the UK and Ireland. It currently has nine outlets in Scotland employing about 70 of its 1,000 members of staff.

“As previously announced, the group continues to assess its ongoing financing requirements, including a possible equity raise, to allow the company to strengthen its balance sheet and provide a strong platform to support the turnaround plan,” Joules said in a statement to the London Stock Exchange.

“Whilst this remains the board’s focus, the company also continues to consider a range of other potential options which may be available to it, where a CVA is one of a number of such alternatives, and notes it has not determined if such alternatives are required. A further announcement will be made if and when appropriate.”

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A CVA is a legally binding agreement that allows companies to repay a proportion of what they owe to creditors over time, generally three to five years. It allows the business to continue trading but also makes it easier and cheaper to make redundancies or renegotiate payments for leased property.

Joules said in August that it expects to make a “significant loss” as profit margins have come under pressure as consumers opt for mark-down items. That profit warning sent its shares tumbling and led to the collapse of discussions in which retailing giant Next would have paid £15 million to take a 25 per cent stake in Joules.

The company – now under the leadership of chief executive Jonathon Brown, a former director at John Lewis – said it is making “good progress” with its turnaround plan. This is concentrated on improving the pricing and promotional strategy, increasing focus on more profitable product categories, and optimising the group’s sales channel mix.

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Based in Leicestershire, Joules is known for its countryside-inspired look and 'yummy-mummy' demographic. But like most retailers, it has grappled with poor sales in recent years as pandemic restrictions severely hampered demand for clothing in the UK.

Trade initially recovered after shops reopened and orders of homeware and garden furniture products grew, but the group has since had to contend with supply chain pressures and increasing costs.

Shares in Joules, which traded as high as 144p in January of this year, closed yesterday unchanged at 9p.