Joules got its much needed “Hail Mary” rescue deal, but it’s one that will see the closure of 19 stores and the loss of 133 jobs.
Its new owners—company founder Tom Joule and Next Plc—are fully familiar with the bankrupt firm’s operations. Despite the closure of some shops and corresponding job losses, the rescue deal saves 1,450 positions. Joules operated 132 shops when it fell into administration on Nov. 16.
“After three years away from the operational side, I’m truly looking forward to inspiring teams with clear direction to excite and recapture the imagination of the customer again. Our customers have always trusted us to lead, not follow, with products that reflect their lifestyle,” Joule said. “It’s important that we live up to the high standards they desire in design, quality and, with Next’s Total Platform delivery and customer support proposition, the service they expect.”
Joule, who founded Joules in 1989, returned to the company in September to oversee the the brand’s product offerings. He remained a non-executive director of the company during his time away from day-to-day operations. Since his return, he has taken on an executive director role and has been working in the background to find backers for an investment in the company.
“I’m so pleased that we have been able to strike a deal that protects the future of the company for all its loyal customers, its employees and also for the town of Market Harborough, which have been so central to Joules’ success,” Joule said.
The key assets of the premium British lifestyle fashion and home brand were acquired for 34 million pounds ($27.7 million). Next also acquired the current Joules headquarters for 7 million pounds ($5.7 million). Under the terms of their purchase agreement, Next will own 74 percent of the equity in the company, while Tom Joule will own 26 percent.
Joules’ early signs of distress were first disclosed this past May, when the company posted a decline in full-price selling in the first half due to in part to inventory delays. The dismal interim results also saw Nick Jones step down from his CEO role. Two months later, Joules called in KPMG’s debt advisory experts to help build up cash. The company also entered into talks with Next for 15 million pounds ($18.2 million) in the form of a minority investment, but those talks didn’t materialize into a transaction. Talks did involve Next running Joules on its Next Total Platform. Joules products have already been selling through Next’s Label channel.
Eventually, Joules ran out of options as its debt reached 25.7 million pounds ($29.4 million) at the end of the October. At the time, it had just 800,000 pounds ($917,400) in available working capital, as well as a debt of 5 million pounds ($5.7 million) due Nov. 30 for a short-term revolving credit facility that it used to order holiday-season merchandise. Compounding its troubles, sales for the 11 weeks to Oct. 30 came in worse than planned as U.K. consumers continued to feel inflationary pressures that has them pulling back on discretionary purchases.