Next reportedly cools on Joules deal

Next is reported to have cooled on in its plan to acquire a 25% stake in Joules, following a recent profits warning from the premium fashion and lifestyle retailer.

Joules confirmed at the start of the month that it was in talks to sell the stake to Next in a move that could raise £15 million.

However on 19 August Joules issued a profits warning saying it expected a "significant loss" in the first half of this financial year, followed by an improved performance in the second half.

According to Sky News there are doubts that Next would now be prepared to agree to a deal at a value of around 33p per share or more, as Joules shares had since dropped to just over 25p a share following the profits warning.

A spokesperson for Joules told Sky News that positive discussions were continuing but the news service quotes a source saying there was "no way" Next chief Lord Simon Wolfson would agree to pay a premium to acquire the stake.

Should the deal go ahead it would lead to Joules migrating to Next "Total" omnichannel platform, along with the other third-party brands in which Next holds a stake. Last year Next entered into a joint venture to run Victoria's Secret's UK retail and e-commerce business as well as that of Gap, which recently completed its migration to the Total platform.

Next has also acquired a 51% stake in premium fashion retailer Reiss, having acquired a 25% stake last year and exercising its right to acquire a further 26% stake earlier this year. Reiss too has moved to the Total platform.

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 an8% 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 also announced a new CEO this month. Former Compare the Market CEO Jonathan Brown will join Joules on 30 September, replacing outgoing CEO Nick Brown. Prior to Compare the Market, Brown held various senior positions including Omnichannel Director at John Lewis, CEO of MandM Direct and COO of Photobox Group.