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Joules considers CVA process as retailer seeks turnaround

Tom Shearsmith
10 October 2022

British lifestyle brand Joules has confirmed it is considering a company voluntary arrangement (CVA) restructuring process as part of its turnaround plans.

The company said on Monday morning that it is assessing its ongoing financing requirements, including the possibility of an equity raise.

It said this remains the company’s focus but that a CVA, which typically involves a firm agreeing delayed or reduced payments to landlords or other creditors, is “one of a number of alternatives”.

It comes after reports by Sky News that the struggling retail brand is in talks with specialists from Interpath Advisory over a process which could potentially pave the way for store closures, rent reductions and job cuts.

The Leicestershire-based brand employs around 1,000 people and runs around 130 stores.

Joules added on Monday that it is continuing to make “good progress” in developing its turnaround plan in a bid to improve profitability. It highlighted that this will include a better pricing and promotions strategy, with more focus on product areas with shorter lead times.

“Joules also continues to make good progress on its simplification agenda and cost management process,” the firm added.

The retailer said last month it was considering a fundraising after a slump in shares over the past year following profit warnings amid soaring costs and a downturn in consumer spending.

Retail giant Next also launched talks with Joules over a deal to buy a minority stake in the business, but discussions between the two collapsed last month.

Joules has had a tumultuous time of late with hot weather hitting retail sales and suppressing demand for its core categories of outerwear and rainwear. The cost of living crisis has also added to the issue. As a result, in its recent trading update, it said it had experienced an 8% year-on-year reduction in retail sales in the 11 weeks of the current financial year to date.

The retailer said it had been obliged to take part in a high level of promotional activity to stimulate demand, which had hit its retail margins. It said, however, that wholesale sales were up 10%.

Joules currently expects to deliver a full year loss before tax and before adjusting items, below current market expectations.

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