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Joules has announced it is exploring a possible CVA after trading continued to soften in recent weeks, as it continues to work alongside Interpath Advisory to explore a number of options to secure the group’s future.
As part of its turnaround plan, the group also advanced discussions with a number of strategic investors, including Tom Joule, to provide a cornerstone investment in an equity raise, and intends to consult with key stakeholders, including suppliers, on its options.
It is also in talks with its lender in relation to a waiver of certain financial covenants in its existing facilities and on its medium-term financing, including a review of covenants, to support the turnaround plan.
It comes as overall trading for the 11 weeks to 30 October 2022 was behind the group’s expectations. Joules said it believes this largely “reflects the challenging UK economic environment which has negatively impacted consumer confidence and disposable income”.
In addition, whilst dresses, menswear and more formal product categories reportedly performed well, larger core categories such as outerwear, wellies and knitwear were impacted by the milder than expected weather in recent weeks.
Retail ecommerce sales were also behind expectations for the period, particularly due to softer ecommerce traffic. Store sales were slightly ahead of expectations, however.
While retail margins benefitted from the positive impact of the group’s improved pricing and delivery proposition, this was offset by high levels of promotional activity across the market, leaving overall retail margin performance slightly behind expectations.
Nonetheless, UK wholesale for the Joules brand performed well and has been in line with expectations. However, wholesale performance overall was impacted by underperformance across Garden Trading and US wholesale.
