Joules Group is on the brink of collapse after it failed to secure new investment putting 1,600 jobs at risk.
It revealed it was to file a notice of intention to appoint administrators after a failure to secure a cash injection. The company, based in Leicestershire with around 1,600 staff and 130 shops, has also requested the suspension of trading in the company’s shares.
It is expected to formally appoint administrators in the next five to 10 working days but stressed that its stores and websites are continuing to trade as normal.
‘Discussions with various parties have not been successful’
In a company statement, Joules said: “On 7 November 2022, the company announced it was in advanced discussions with a number of strategic investors to provide a cornerstone investment in an equity raise process.
“The company also announced it was in discussions regarding a bridge financing proposal in order to enable continued progress to be made with the re-financing plans referred to above. The board confirms these discussions with various parties have not been successful and have now terminated.
It said trading has been weaker than expected: “The challenging UK economic environment which has negatively impacted consumer confidence and disposable income.” It added that sales of “outerwear, wellies and knitwear” had been hit by milder-than-expected weather.
Joules is the latest retailer to hit the buffers after online furniture business Made.com collapsed last week, with rival Next buying up its brand, websites and intellectual property. The deal led to 320 redundancies at Made, while a further 79 employees who had already resigned and were working out their notice were forced to leave the business immediately.
Next had also been in talks with Joules over a deal to buy a minority stake in the business, but discussions between the two collapsed in September. Joules then revealed it was in talks over a so-called cornerstone equity raise with strategic investors including founder Tom Joule – who recently returned to the firm in an executive position as product director.
It was also holding discussions with Mr Joule and its lender over a possible bridge financing deal to allow the funding talks to continue but failed to secure the crucial strategic investment needed. At the same time, the group was considering the option of a company voluntary arrangement (CVA) – which typically involves a firm agreeing to delayed or reduced payments to landlords or other creditors – as part of a restructuring to turn around its fortunes. As well as the Joules stores and online business, the Joules Group also runs the online-only Garden Trading Company.
The Joules founder said it was “a deeply disappointing day for Joules, and a sad day for me personally”. He said: “We recognise our business has become too complex and our model today is not aligned to succeed in the current, tough trading environment. Over the last two months I have been back working as part of the new executive leadership team to simplify the business and improve operations.
“Whilst we have made significant progress during this period, regrettably we simply could not make the required changes to the model quickly enough in this challenging environment. For our stakeholders, including our customers and our people, we recognise today’s news will be deeply unsettling, and we are sorry for this. However, we would like to reassure everyone it remains business as usual right now.”
What is the Joules Group share price?
Joules Group listed its shares on London’s junior stock exchange market Aim in 2016, and at the time was valued at £140m.
The shares have been currently suspended, at a price of 9.2. The value of shares in Joules had fallen by more than 95% over the course of the past 12 months. In its statement to the stock market, Joules said: “The board is taking this action to protect the interests of its creditors.”
What are customer rights when a company goes into administration?
Lisa Webb, consumer rights expert at Which?, said: “The news that Joules is entering administration will be devastating for its employees, as well as a real concern for customers with orders placed – as exercising your rights is not always straightforward in these circumstances.
“When a company is in administration, it may not accept the return of items.
“Many customers may find themselves in a situation where items have not been delivered. It is always worth trying to claim for a refund in these situations, but customers should know it is not guaranteed. The cost of repairs for faulty items could still be claimed if they came with a warranty.
“If you’ve bought something on your credit card costing more than £100, the card provider is jointly responsible for any breaches of contract.
“You can claim under Section 75 of the Consumer Credit Act if the item is faulty or not delivered.
“If you paid for goods that cost less than £100 on a credit or debit card, you may be able to claim under chargeback.”