Joules has found a way out of its liquidity problems.
The troubled British lifestyle group is in talks to sell a minority stake to U.K. specialty retailer Next Plc for 15 million pounds ($18.2 million). Joules on Monday confirmed the talks with Next, saying that one part of the negotiation involves adopting Next’s “Total Platform services” to support its long-term growth plans.
“Additionally, in conjunction, Joules confirms it is in discussions with Next about a potential equity investment raising proceeds for Joules of 15 million pounds at no less than Joules’ current market price, which would result in Next becoming a strategic minority shareholder in the Group,” Joules said, adding that shareholders would need to approve the equity investment.
There’s no guarantee that talks would produce an agreement, it added.
Joules last month called in KPMG’s debt advisory experts to help it build up cash. And as it sought options to ease liquidity constraints, the talks with Next confirms the financial pressures Joules faces.
Questions surfaced in May when Joules reported a decline in full-price selling, mostly due to inventory delays as a result of supply chain disruptions. Although it posted strong revenue growth for the third quarter ended May 1, 2022, the home and garden retailer’s profit performance missed internal expectations, leading to CEO Nick Jones planned departure next year. Chief executives often find themselves heading for the exit sign when their companies hit a financial brick wall. Joules is looking for Jones’ successor.
Joules has since trimmed production lead times, and diversified its customer based, including reducing its exposure to China. Last month it said it upped its cash position at the end of June to 15.0 million pounds ($18 million) of available cash resources from 11.3 million pounds ($13.4 million). And it has received credit approval from Barclays Bank for an additional 5 million pounds ($6 million) on its borrowing facilities until November to support working capital requirements for the holiday selling period.