Skip to main content

Bad Times for the Brits: Joules Up a Creek, M&S Surviving ‘Stormy Weather’

Though inflation is far from a country-specific problem right now, the U.K. could be in for a doozy.

That’s because people there are especially worried about how they’ll manage to pay their mortgages, which are set up differently than they are in the U.S.

“Unlike the U.S. which has a fixed-rate option, mortgages in the U.K. all reset after the first five years. A huge portion is expected to reset in 2023,” said Aptos Retail vice president of strategy Nikki Baird, who keeps tabs on what’s going on in global retail trends and believes a consumer spending slowdown reflects mounting concern about balancing bills against holiday and discretionary spending.

U.K. foot traffic also mirrors the sluggish economic climate. Springboard’s latest data says footfall fell 7.5 percent last week, with high streets suffering a 10.1 percent drop.

“The gap from the 2019 footfall level widened last week from the week before last, indicating that the drop in footfall in the week post half term this year was more severe than it had been in the same week pre- Covid,” said Diane Wehrle, insights director for the data firm.

The slowdown’s been a factor in job cuts at Asos, Ted Baker‘s sale to Reebok owne Authentic Brands Group, and a bankruptcy here and there.

Related Stories

Earlier this year British men’s wear brand TM Lewin collapsed for the second time thanks to a less-formal return-to-work climate that has male staffers going casual in their cubicle. And home furnishings lifestyle platform has a trio of administrators managing its affairs after it ran out of cash.

“We’re deeply saddened to announce the closure of MADE.COM,” a statement on its website reads. “We thank you for being a part of our story, and hope to meet again.”

Next Plc beat out Frasers Group with a 3.4 million pound ($3.9 million) bid for Made’s intellectual property, a precipitous drop from the online furniture store’s 775 million pound ($882 million) valuation last year after it went public. Bloomberg reported that more than 300 workers will lose their jobs.

This week both Joules and Marks & Spencer (M&S) gave investors cause for concern with their latest warnings.


Joules is running out of options now that staple products like wellies and outerwear haven’t sold as well as it hoped. The homewares and fashion lifestyle chain is trying to secure a bridge loan to give it some breathing room while it looks at what else it can do to stay afloat.

Joules’ debt reached arounnd 25.7 million pounds ($29.4 million) at the end of October while it has just 800,000 pounds ($917,400) in working capital. While working capital totaled 11.4 million pounds ($13.1 million), 5.6 million pounds ($6.4 million) of that amount is tiedup by payment providers and 5 million pounds ($5.7 million) will be used to repay the short-term revolving credit facility due Nov. 30 that it used to order holiday-season merchandise/

Joules sounded the alarm in May when it said it was having trouble selling goods at full price and getting product in on time. That same month Nick Jones stepped down as CEO. In July the retailer called in KPMG’s debt advisory experts to help it build up its cash position. August talks with Next Plc for a 15 million pound ($18.2 million) investment stake didn’t amount to anything.

On Monday Joules said it’s turnaround plan focused on control costs and managing cash is going to plan. The company has also streamlined its wholesale operations and is almost completely out of the European Union and U.S. It’s tweaked its sales, promotion and buying approach and is finished updated its product process and sourcing model.

Despite the positive progress, Joules is still struggling to move full-price product. Since its August update, sales for the 11 weeks to Oct. 30 came in worse than what it planned for and e-commerce isn’t doing well either. Better pricing is helping margins but promotions are doing their damage.

Joules chalked it up to “the challenging U.K. economic environment” and the fallout on consumer confidence and income.

“In addition, whilst dresses, menswear and more formal product categories have performed well, larger core categories such as outerwear, wellies and knitwear have been impacted, in part, by the milder than expected weather,” it added.

Joules is currently in talks with potential strategic investors, including company founder Tom Joule who recently returned to the company. He’s looking at making an equity investment, and is talking with lenders about a possible bridge loan as a stopgap measure while refinancing plans are explored. Joules could also go the CVA route or equity raise. And Joules is asking lenders to waive some of its financial burdens.


Profits are falling at M&S, which on Wednesday reported a 23.7 percent first-half decline for the metric and said it expects a full-year tumble as well.

The retail chain thinks next year will be even worse than the current one. Sales for the first four weeks of the second half are tracking to plan, with clothing and homeware sales up 4.2 percent. M&S sees costs staying high for the foreseeable future.

“Clothing has delivered a stand-out performance from a market leading position in value with improving style credentials. The programme to renew and rotate our store estate is driving sales and quick paybacks, while the M&S App now accounts for over a third of online Clothing & Home sales,” M&S CEO Stuart Machin. “Looking beyond the current stormy weather, much is in our control and our mandate is clear—to step up the pace, accelerate change, drive a simpler, leaner business and invest in growth opportunities to build a reshaped M&S.”

M&S clothing and home goods are sales up 14 percent for the current year, with store sales up 18.8 percent and e-commerce up 4.9 percent over strong comps. The clothing and home division’s adjusted operating profit of 171.4 million pounds ($195.4 million) reflects strong sales growth and its full price mix. The food division also saw sales climb, although operating profit fell.

So what’s the problem?

M&S says clothing and home now offers better value for money and style, helping the division grow volume in the period, as the company invests in emerging growth categories such as kidswear.

The company believes “conditions will become more challenging” in Fiscal 2024, citing the cost-of-living squeeze and the “most marked rise in the cost of doing business for many years.”

“Womenswear grew sales 15 percent in the period despite 5 percent fewer options and the overall business had 276 lines achieving sales over 1 million pounds ($1.1 million) in the first half. Sales in these lines are up 25 percent” when compared with the year-ago period,” M&S said. Dresses were up by more than 50 percent, while men’s formal shirts also improved.

Leggings, underwear, sleepwear and school uniforms aren’t as sensitive to changes in discretionary spend. These represent more than 60 percent of M&S clothing and home sales in the past year.

The M&S stores in Stevenage now has redesigned fitting rooms, self-service checkouts for apparel and home goods, click and collect and enhanced RFID to reduce loss and improve stock counting. “The store outperformed its business case in its first three months of operation. It is attracting a younger shopper profile, over indexing on kidswear, home and beauty and has high levels of cross shopping,” the company said.

M&S has readjusted its supply chain operations to hold more stock upstream, and now touches product fewer times, which cuts labor costs and markdowns. Returns now processed in 10 days versus 20 means healthier revenue.

The company is added drop-shipping to attract more third-party brands.

For the half ended Oct. 1, revenue rose 8.5 percent to 5.54 billion pounds (6.31 billion) from 5.11 billion pounds ($5.82 billion). Profit before tax rose 23.7 percent to 205.5 million pounds ($234.3 million) from 269.4 million pounds ($307.1 million).