// Joules is seeking an equity raise and is talking to investors including founder Tom Joule to raise cash
// The retailer is also looking into undertaking a CVA
Joules is in talks with “strategic investors”, including founder Tom Joule, as it eyes an equity raise, however a CVA still on the table after poor trading left its working capital position “below expectations”.
The retailer said trading has been below expectations in the 11 weeks to October 30 due to “the challenging UK economic environment”.
Joules said this had “negatively impacted” consumer confidence and disposable income.
Meanwhile, milder weather has impacted its sales of knitwear and outerwear and that ecommerce sales had been behind expectations due to softer traffic, although it said store performance was slightly ahead of expectations.
Joules revealed it was in “advanced discussions” with a number of strategic investors, including founder Joule, “to provide a cornerstone investment in an equity raise”.
However, it will continue exploring alternative options such as a CVA.
The retailer is working with Interpath Advisory and said it would consult with key stakeholders, including its suppliers, on both its turnaround plan and the potential CVA if it were to take that route.
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While Joules has £11.4 million worth of financial headroom and £25.7 million worth of debt, poor trading has led to £5.6 million of that headroom being “trapped cash”, cash held in transit by payment providers.
The retailer has a further £5 million in loans due and is currently in discussions with both Joule and its bank regarding a bridging loan to provide the cash necessary to tap into any further investment.
However, Joules said “there can be no certainty that any bridge financing proposal will be agreed, nor as to its terms, in which case the company expects it would be unable to repay” debts.
Joules had been in talks with Next, which was looking to take a 25% stake in the struggling fashion retailer, however Next abandoned the deal in mid-September following a dip in Joules’ share price.
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