Scottish jobs at risk as retailer Joules on brink of failure

The company, renowned for its country-style clothing, has become the latest big-name retailer to fall foul of the cost-of-living crisis, its failure coming just days after the collapse of Made.com, the online furniture retailer.

Joules has 1,600 employees and 132 stores, with 74 of those roles and nine of the outlets in Scotland.

The difficulties at the company have been exacerbated recently by mild weather that has dented sales of winter lines such as outerwear, wellies, and knitwear. It has also come under pressure from the high level of promotional activity in the market.

In recent weeks, Joules had attempted to shore up its position by holding talks with potential investors, including Next, over an equity raise, while the possibility of a company voluntary arrangement (CVA) with insolvency specialists at Interpath Advisory was explored. It also emerged last week that discussions had taken place with company founder – and product director – Tom Joules with regard to a bridge financing proposal to allow it to continue attempts at refinancing.

Updating the City on Monday last week, Joules warned that its capital position was below expectations, with net debt of £25.7 million at the end of last month, as it reported that trading for the 11 weeks to October 30 had fallen short of forecasts. It also warned then that it would be unable to repay a £5m short-term revolving credit facility that was due to be repaid on November 30 if a bridge financing deal were not secured.

However, the company told the City yesterday that discussions aimed at refinancing the business had been unsuccessful. With those talks now terminated, the board has resolved to file a notice of intention to appoint Will Wright, Ryan Grant, and Chris Pole of Interpath Advisory as administrators to the company and Joules Limited, and to appoint Mr Wright and Mr Grant to subsidiaries The Garden Trading Company and Joules Developments, “as soon as reasonably practicable”.

Joules said it had taken the action to protect the interests of its creditors.

Shares in the company, which were suspended yesterday morning, had fallen from 219p around a year ago to 9.22p by the close of trading on Friday.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, suggested Joules had fallen behind changing fashion trends but said she expects there to be “significant interest” in the company’s name and intellectual property.

Ms Streeter said: “It’s not just the cutback in non-essential spending by consumers which have caused Joules’ woes. Hot weather put a big dent in its core range of jackets and wellies, but Joules might have weathered this particular storm if it’s product ranges had been better diversified, and the design teams had kept up with the trends.

“The apparel retailer, once the darling of the outdoor set, had become stuck in a rut as athleisure wear took over as the casual clothes for the younger generation and even Joules’ core customers started falling out of love with the staples of its floral and fashion ranges. It can be hard for a brand based on British heritage to move with the times, but Joules’ demise shows fast-moving fashion trends can cause serious damage to slow coaches.”

Ms Streeter added: “Joules' repeated discounting also arguably damaged the brand, with customers likely to have been holding out for red stickers rather than taking the full-price plunge. The Joules brand is still strong, and although it will need a modern twist to help it survive longer term, there is likely to be significant interest in the name and the intellectual property.”

Clive Black, head of consumer research at Shore Capital, said events at Joules means there will be “understandable worry for its employees and suppliers” while raising the prospect of major high-street players expressing interest in taking the brand on.

Mr Black said: “We now await to see how the administration process progresses; will founders re-emerge, could there be trade interest in the brand, or will the brand disappear? Time will tell.

“The new Joules, should it re-emerge, is likely to be a smaller venture we sense and so represents another notch in UK apparel retail industry capacity reduction, following on from the more major rationalisation by Arcadia and Debenhams that represent a material positive for the rest of the trade, removing surplus capacity and disruptive promotional activity.”

Joules’ imminent failure comes amid a cost-of-living crisis that has undermined consumer confidence and created challenging conditions for retailers. It comes just days after Made.com, the online furniture retailer, collapsed into administration, with its brand and intellectual property acquired on the same day by Next for £3.4 million. Next did not take on any staff, meaning hundreds of jobs at Made.com were likely to go.