Joules sounds the alarm about a potential loan default as he asks investors for emergency funds

Joules warned yesterday that he could default on a bank loan later this month and could ask investors for more funds in an emergency capital raise. The news sent his share price down by more than a fifth.

The retailer has said it needs to arrange a bridging loan in order to pay off a £5m credit facility due on November 30 and has appealed to Barclays and its founder Tom Joule for short-term financing.

The management team is in talks with investors, including Joule, about a possible capital increase. It is also evaluating whether to launch a company voluntary arrangement, an insolvency proceeding, which would help reduce its rental bill. Joules would need to secure a bridging loan to buy time to move forward with a CVA and capital increase.

The company said trading had been worse than expected in recent weeks and mild weather had affected sales of outerwear, Wellington boots and knitwear.

In a statement, Joules said: “The group’s intent is to begin consultation with key stakeholders, including suppliers, on the recovery plan, including potential alternative options, should these be necessary.”

Joule, 54, launched the fashion retailer in 1989 by selling clothes at a country show in Leicestershire. The chain, known for its colorful country-inspired clothing, has 1,700 employees and 130 stores.

In a note, analysts at Shore Capital noted that while the mild weather wasn’t particularly surprising, coming during a cost-of-living crisis, it was especially unhelpful for clothing retailers, adding: “Mild fall may increase earnings challenges and perhaps accentuate the need for destocking.”

Peel Hunt analysts said Joules’ website offered deep discounts on a variety of items “as the company focuses on generating cash.”

Meanwhile, retailer is expected to go into administration after failing to find a buyer.

One of the company’s founders has revealed that he tried to buy the business online but was turned down by PwC managers.

Ning Li, who launched the online sofa business with Brent Hoberman and others in 2010, wrote a letter to staff to tell them that she “really tried” to save their jobs.

“Unfortunately, my proposal was not accepted. Apparently it would be preferable to break up the company and sell it in parts to generate a little more cash. It doesn’t make sense to me. But I wanted you to know that I really tried.”

Next has been flagged as a potential buyer.

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