(Bloomberg) — Joules Group Plc is set to file for insolvency after the British retailer failed to secure bridge financing or raise equity, putting around 1,600 jobs at risk.
The clothing chain, known for its colorful coats and Wellington boots, said it will appoint Interpath Advisory as administrators to protect the interest of creditors. Shares have been suspended.
Joules warned last week that it would struggle to repay a £5 million ($5.9 million) loan due at the end of this month amid weaker-than-expected sales and reduced cash flow. Founder Tom Joule, who recently returned to the company to try to revive its performance, was among investors in talks for the equity raising and was also in separate negotiations for bridge financing.
It would be the second major UK retailer insolvency in the space of a week after Made.com Group Plc brought in administrators and was sold to Next Plc. Joules’ talks with Next to become a minority shareholder with a potential equity investment of about £15 million fell through in September.
It’s uncertain whether Joules will gain interest from rival retailers as it enters insolvency with Next or potentially the acquisitive Frasers Group Plc possible candidates.
Read More: Frasers Said to Be in Talks to Buy UK Tailor Gieves & Hawkes
“Joules has been a remarkable tailspin story,” Clive Black, an analyst at Shore Capital, wrote in a note to clients. “Will the brand disappear? Time will tell.”
Joules started out as a clothing stall at a country show in Leicestershire more than three decades ago and gained a name for itself producing colorful country attire loved by equestrian types. The retailer, which also sells childrenswear and products for the home, has more than 130 stores across the UK with a presence in the US and Canada.
But this year Joules was hit by multiple profit warnings and the stock has fallen 94%. Chief Executive Officer Nick Jones left earlier in the year amid supply chain difficulties and the lasting impact of Covid on trading. In August the retailer warned it would make a loss for the year and said it was in negotiations with banks to waive debt covenants.
Part of the problem has been the growing cost of living crisis driving shoppers to pull back and consider non-essential purchases more carefully. Joules also struggled with the wrong product mix during heatwaves this summer.
Joules was working on turnaround efforts with Interpath including a company voluntary arrangement, a form of UK insolvency proceeding that can permit retailers to renegotiate rents and close stores to lower costs.
(Updates with context throughout.)