Retailer Joules nears collapse risking 1,600 jobs Published
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Image source, Getty Images By Nick Edser Business reporter About 1,600 jobs could be at risk with clothing group Joules set to become the latest victim of the tough times hitting the retail sector.
The Leicestershire-based company, which has 132 shops, said it intended to appoint administrators after failing to secure emergency investment.
Joules said last week that recent sales had been weaker than expected.
Many retailers have been struggling as consumers cut spending in the face of the soaring cost of living.
Last week, furniture retailer Made.com fell into administration , leading to hundreds of job losses, with High Street giant Next buying Made’s brand name, website and intellectual property.
Next had been in talks with Joules during the summer over taking a stake in the company, but these discussions ended in September.
Why are prices rising so much? Joules was founded by Tom Joule, and started out selling clothes at country shows in 1989.
Mr Joule said he had started the firm with “one man, one tent and a lot of enthusiasm”, finding a niche in the market when he realised there was a demand for colourful clothing amid the standard tweeds worn to such events.
On Monday, Mr Joule said in a statement: “Today is a deeply disappointing day for Joules, and a sad day for me personally.
“However, we recognise our business has become too complex and our model today is not aligned to succeed in the current, tough trading environment.”
He added: “It is my strong belief that Joules remains a desirable, differentiated brand that, with the right model and structure, can thrive again.”
As well as the Joules stores and online business, the Joules Group also runs the online-only Garden Trading Company.
Announcing disappointing trading last week, Joules said this was largely due to “the challenging UK economic environment which has negatively impacted consumer confidence and disposable income”.
It also said that sales of “outerwear, wellies and knitwear” had been hit by milder-than-expected weather.
The squeeze on consumer spending, with households facing prices rising at the fastest pace for 40 years, has led to problems across the retail sector.
Joules has come a cropper from a killer combination of rising costs and falling sales.The weather hasn’t been kind to it either.A summer heatwave isn’t great if you’re trying to flog outdoor clothing.
But some of its woes have been self-inflicted.Like Cath Kidston and Laura Ashley, it ran out of fresh ideas.How many pairs of posh wellies or patterned cagoules do people need?
The business also became a bit too complicated as it focused on growth.Retailers need to be resilient as consumers tighten their belts.
But Joules still has a loyal following and it’s hoped this brand will be bought out of insolvency proceedings to survive, albeit in a smaller form.
Last week, Marks and Spencer warned of a “gathering storm” of higher costs for retailers and pressure on household budgets, adding that “all parts” of retail would be affected.
“No one is immune to the challenges facing the retail sector,” said retail analyst Natalie Berg.”Brands that were considered invincible just a few years ago are now falling by the wayside.
“You’d think Joules would be more insulated because they’re targeting the middle classes, but everyone is looking to shop a bit smarter.”
Image source, Getty Images Image caption, One analyst told the BBC repeated discounting may have damaged the Joules brand Tamara Sender Ceron, associate director of fashion retail at research firm Mintel, said their research indicated that 41% of clothes shoppers had switched to a cheaper retailer in the past year.
Retailers like Joules were particularly vulnerable to changes in shopping patterns, she said, as its customer base includes many families who are being squeezed by the rising cost of living.
Ms Sender Ceron also said that Joules had “too many stores for the way people prefer shopping now”.
“Many of the stores have been underperforming,” she said, adding that the company had been too slow to improve its online offering.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said Joules might have fared better “if its 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.”
Ms Streeter also said repeated discounting by Joules had arguably damaged the brand, “with customers likely to have been holding out for red stickers rather than taking the full-price plunge”.
Share slump Joules said last week that the company was in “advanced discussions” with a number of strategic investors, including its founder Tom Joule, but on Monday it said these had failed.
The company said it had resolved to file a notice of intention to appoint administrators “as soon as reasonably practicable”.
“The board is taking this action to protect the interests of its creditors,” it added.
Joules Group also said it was suspending trading in its shares.
The company listed its shares on London’s junior stock exchange market, Aim, in 2016, and at the time was valued at £140m.
However, over the past year its share price has fallen by more than 95% and on Friday the shares stood at about 9p, valuing the company at a little over £10m.
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