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Joules in Takeover Talks, Is Bidding War Next?

U.K. retailers are hoping for an upbeat holiday season, even if it means they’ll have to push through a stream of promotions to get sales in the can.

Along the way, there’s a bit of hope too for 2023. Bidders are expected to line up for bankrupt Joules, which fell into administration last week. And new Finance Minister Jeremy Hunt delivered a budget to Parliament last week that offers relief for retail.


Joules is one of the most recognisable names on the high street, with a unique brand identity and loyal customer base,” Will Wright, head of restructuring at Interpath Advisory and a joint administrator the Joules estate, said last week.

Wright noted that his firm has fielded an “overwhelming amount of interest from interested parties,” suggesting there could still be a future for the company.

He said the plan is to keep all 132 stores in operation during the holiday season as Interpath assesses the options, including putting Joules up for sale.

The retailer’s first warning came in May when it said it was having problems selling goods at full price. Two months later, Joules called in KPMG’s debt experts to help it build a cash position.

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Joules was in talks with Cornerstone Investment and Next Plc—the parties had discussed a minority-stake investment of 15 million pounds ($18.2 million)—for an equity raise. It wasn’t immediately clear whether the two would come back to bid for Joules assets. With Joules in bankruptcy, either one could acquire and own the key assets at a far lower purchase price than what it would have paid for just a minority stake.

Mike Ashley’s Frasers Group has been particularly acquisitive this year. It is said to be snooping around and is expected to enter the bidding fray. Another name that’s been mentioned as having some interest is Marks & Spencer. Also, a possible bid could come from Brigadier Acquisition Company, the owner of Crew Clothing.

And over the weekend, Sky News reported that South African firm The Foschini Group (TFG)—it owns British brands Phase Eight, Hobbs, Damsel and Whistles—also was in talks with Joules about an investment stake before the British fashion and lifestyle brand entered administration. The Sky News report said TFG is now weighing an bid for Joules.

UK business rates

On Thursday Hunt, the new finance minister, delivered his budget to Parliament, which includes a 13.6 billion pound ($16.2 billion) package to support the retail sector.

The package includes the freezing of the business rate multiplier at 51.2 pence ($0.61), or 49.9 pence ($0.59) for small businesses. The freeze is slated to last for a year to April 2024. Business rates were set to rise in April 2023.

In his “Autumn Statement” on budget, Hunt also said he would proceed with a revaluation of business properties from April 2023. And the plan also includes the scrapping of the downwards phasing of transitional relief. That initiative limits the reduction in liability after a revaluation.

Helen Dickinson, chief executive of the British Retail consortium, said the business rate package shows that the government has heard the concerns of the retail industry.

“Retailers are working incredibly hard to support customers—expanding value ranges, fixing the prices of essential items, and offering discounts to vulnerable households,” Dickinson said. “This Autumn Statement supports that commitment by reducing upwards pressure on prices in the short term, and helping retailers protect jobs, keep shops open, and protect the vibrancy of local communities.”

She said the transitional relief move marks an “essential step” towards longer term reform of a broken business rates system.

“This decision means that April’s bills reflect market conditions and retailers will pay only what they owe, rather than being forced to overpay their rates bill when the value of their property has already fallen,” Dickinson said.

Retailers have long since complained about their high business rates. The burden became even more evident in the aftermath of the Covid-19 pandemic as stores were temporarily closed for a significant period of time. Business rates are a tax on the occupation of commercial space. On average, businesses pay rates equal to 50 percent of their annual rent.

Hunt’s predecessor was Rishi Sunak, now U.K.’s Prime Minister. Sunak is well aware of the need for change on how business rates are calculated. When he was Finance Minister under former U.K. Prime Minister Boris Johnson, he provided a 4.6 billion pound ($6.2 billion) aid package in January 2021. The package was intended to help an estimated 600,000 retail, hospitality and leisure businesses

Some retailers also have been pushing landlords to renegotiate their leases from fixed rent to ones based on a percentage of sales to reflect the shift in consumer spending to online and reduce their overall burden.

UK’s October retail sales

On Friday, U.K.’s Office for National Statistics (ONS) said retail sales rose by 0.6 percent in October 2022, following a decline of 1.5 percent in September. The decline in September was partly attributed to the additional bank holiday for Queen Elizabeth’s funeral. Over the same period, non-store retail sales—primarily online retailers—saw their sales volume increase 1.8 percent from a decline of 2.5 percent.

For the three months ending Oct. 31, sales volumes fell 2.4 percent “when compared with the previous three months; this continues the downward trend seen since summer 2021,” ONS said. Sales at non-food stores rose by 1.1 percent in October, and were 1.7 percent below February 2020 levels. In addition, the proportion of retail sales occurring online was 26.1 percent in October, remaining at a consistent level since May 2022.

“Rising retail sales continue to mask a fall in volumes, as inflation continued to inflict pain on retailers and consumers alike,” BRC’s Dickinson said, adding that footwear sales generally held up “slightly better” over the period.

Dickinson also said that consumer confidence has improved slightly as recent political turmoil began to abate. But she noted that while retailers are hoping sales will pick up as the festive season approaches, “there is little chance of them catching up with current double-digit inflation.”

Meanwhile, U.K footfall data firm Springboard said foot traffic rose by just 1.6 percent last week from the prior week, which saw an increase of just 1.3 percent. Calling the data a “pre-Black Friday lull,” Springboard said U.K. footfall traffic fell by nearly half versus 2021 levels as consumers are caught up in the midst of a cost of living crisis. The 1.6 percent gain indicates reservation by consumers, despite early Black Friday promotions, Springboard noted.

“This suggests that despite a range of Black Friday promotions already being active, consumers have not yet increased their shopping activity, and may well be holding back in the hope of securing more favourable discounts as the week progresses,” Diane Wehrle, Springboard’s insights director, said. “The see-sawing nature of footfall from week to week makes an annual comparison helpful, and last week the uplift in footfall 2021 fell back to nearly half of that in the week before last, demonstrating the vulnerability of consumer activity. This also comes as news broke that H&M is closing one in five UK stores, which is a process that many retailers have undergone post-pandemic and over the long term, reflecting a need to futureproof their store networks and also cautiousness in the current climate.”

H&M earlier this year announced plans to close up to 240 locations before January. The fast-fashion chain still has about 192 doors in the U.K., down from 248 a few years ago. House of Fraser shuttered its London flagship earlier this year, while John Lewis has closed 16 stores since the pandemic began.

And M&S last month said it would shutter 67 of its larger locations—its has 247 currently in operation—over the next five years. M&S said it was “rotating to higher quality new space,” which translated to closing lower productivity full-line stores. And while the plan is to have just 180 full line doors by Fiscal Year 2028, the department store retailer was hoping to accomplish its planned store count within three years.