Fashion retailer Joules will appoint managers after talks with investors over bailout financing broke down, leaving its 1,600 employees at risk of losing their jobs.
The company said last week it was in talks with strategic investors over an emergency capital raise, but said it needed bridge financing to avoid defaulting on a bank loan later this month.
Joules said today: “Discussions with various parties have been unsuccessful and have now ended.”
It has filed a notice of intent to appoint Interpath Advisory as administrators of the company and its subsidiaries, Joules Limited, Garden Trading Company Limited and Joules Developments Limited.
The Aim-listed company has also asked the London Stock Exchange to suspend trading of its shares, which closed at 9¼p on Friday. They were trading at more than 300 pence in June last year.
Last week, online furniture seller Made.com also appointed administrators, leading to 400 job losses. The number of business insolvencies in England and Wales hit its highest level in the April-June period in almost 13 years, as rising energy prices took a toll on businesses, data showed last month. .
Among those contacted about the bridging loan to pay off a £5 million loan due on November 30 was Tom Joules, the company’s founder. The retailer needed the loan to buy time to move forward with fundraising, as well as a possible company voluntary settlement, an insolvency proceeding, to help reduce its rental bill.
Joules, 54, launched the fashion retailer in 1989 by selling clothes at a country show in Leicestershire. The chain is known for its colorful country-inspired clothing. It has about 130 stores.
The company has struggled since it issued a profit warning in August after the heat wave hurt sales of wellies and other wet-weather gear. It said its financial performance for the year would be “significantly below current market expectations.” At the same time, like other clothing retailers, it was suffering from inflation and shoppers were becoming more cautious about spending.
Shortly after the warning, Joules said he was talking to Next, the FTSE 100 fashion retailer, about a £15m equity investment. No agreement was reached and last week, Next acquired the Made.com brand out of administration.