Next buys Joules out of administration in £34m deal

February 2023 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

February 2023 Issue

In a rescue deal that takes the beleaguered British lifestyle brand Joules out of administration, UK multinational clothing, footwear and home products retailer Next Plc has acquired the majority of Joules’ assets via a newly formed company for a total cash consideration of £34m.

Under the terms of the agreement, Next will own 74 percent of the equity of the new company, with the remaining 26 percent owned by Tom Joule, founder of Joules. In addition, Next has acquired the current Joules head office in Market Harborough for £7m cash.

“We are excited to see what can be achieved through the combination of Joules’ exceptional product, marketing and brand building skills with Next’s Total Platform infrastructure,” added Lord Wolfson, chief executive of Next.

Moreover, while the rescue deal will keep about 100 Joules shops open, approximately 24 will be closed – 19 of which will close immediately, according to Next – with the loss of 133 jobs from among 1600 Joules staff members.

Launched in 1989, Joules is a British clothing company which sells clothing and homeware products inspired by British country lifestyles. In 2011, its founder described its business model as creating clothing with “colour and fun and entertainment”.

However, due to an ever-changing retail landscape in recent years, Joules has struggled, particularly during 2022. Trading overall for the 11 weeks to 30 October 2022 fell short of the company’s expectations – a drop that Joules believes reflects the challenging UK economic environment which has negatively impacted consumer confidence and disposable income.

In addition, while dresses, menswear and more formal product categories have performed well, larger core categories such as outerwear, wellies and knitwear have been impacted, in part, by the UK’s milder than expected weather during October and November.

With the company on its knees, administrators were appointed in November 2022, before Next, in partnership with Mr Joules, who had stepped back from designing Joules’ products in 2019 but recently returned to be the company’s product director, negotiated a rescue deal.

“After three years away from the operational side, I am truly looking forward to inspiring teams with clear direction to excite and recapture the imagination of the customer again,” said Mr Joules. “Our customers have always trusted us to lead, not follow, with products that reflect their lifestyle. It is 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.”

Joules, like many retailers in the UK, has been struggling to trade as shoppers rein in their spending due to soaring household bills. Another high-profile casualty of the UK’s consumer downturn, Made.com, also entered administration in recent months, before being bought out, again by Next.

Mr Joules concluded: “I am 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.”

Fraser Tennant