High street giant Next is in talks to take a major stake in Joules, the ailing fashion and lifestyle chain.
Sky News has learned that Next has been in negotiations for several weeks to acquire up to 25% of the smaller London-listed retailer.
City sources said this weekend the talks were not certain to result in an agreement and that an announcement could take some time.
If successful, a transaction would make the troubled Joules the latest in a line of high-street names to join Next’s online platform as it continues to expand beyond the core brand that made it an industry behemoth .
Joules, which trades in around 130 stores and employs more than 1,000 people, has been going through an increasingly difficult time as a company inflationary pressures flood retail.
Last month it hired KPMG to help with efforts to improve “profitability, cash generation and liquidity headroom.”
It subsequently said it had agreed an expansion of bank facilities with its main lender, Barclays, that would limit its ability to pay dividends.
Joules’ valuation has tumbled nearly 90% over the past year, though revenue growth has held up fairly well.
At Friday’s closing price of 33p, it had a market valuation of just £37m.
For Next, acquiring 25% of Joules would cost a tiny sum in the region of £10m at the smaller company’s current valuation.
It was unclear this weekend how the share purchase would be structured and whether it would include governance rights.
The next one struck Joint ventures with brands like Reiss and Victoria’s Secret in recent years, while it also recently reached an agreement to fully acquire the baby products retailer JoJo Maman Bebe alongside the Davidson Kempner hedge fund.
Under Lord Wolfson, its CEO, Next has diversified into a broader mix of retail and lifestyle products, benefiting from a litany of bankruptcies among rivals like Arcadia Group and Debenhams.
Next was among the bidders for TopShopthe jewel in Sir Philip Green’s former high street empire, but eventually withdrew from the race, leaving the field free for ASOS.
EY is said to advise Next on the talks with Joules.
Joules has been listed on the London Stock Exchange since 2016 and was founded in 1989 when Tom Joule started selling clothes from a country display stand in Leicestershire.
Mr. Joule is now a non-executive director of the company.
Joules will be managed by Ian Filby, former DFS chief, while CEO Nick Jones is set to step down in the coming months.
Joules plans to report full-year results in September.
This weekend, Next and Joules declined to comment.
Next pounces on a stake in struggling lifestyle retailer Joules | business news
Source link Next pounces on a stake in struggling lifestyle retailer Joules | business news