Monday 14th November 2022 15:30 GMT
There has been an air of inevitability for some time hanging over Joules, the fashion retailer, which today announced that it was going into administration.
You name it, it has gone wrong for Joules this year.
There is an old saying in the City that, like buses, profits warnings come in threes and, sure enough, Joules delivered a trio of them this year – on 1 February, 4 May and 19 August – each of which sparked a downward lurch in the share price.
Those alerts all painted a picture of a business that was being buffeted by a series of headwinds. February’s pointed to supply chain difficulties, a warning echoed in May, when the company also flagged that it was being hit by weaker consumer spending.
With this warning came news that Nick Jones, the former chief executive, was stepping down after three years in the job. August, meanwhile, brought the revelation that the “recent extremely warm and dry summer weather” had hit sales of outerwear, rainwear, knitwear and wellies and compounded issues with consumer spending.
It was accompanied by news that Joules expected, as a result, to report a full-year loss.
Management has sought to mitigate the damage done by seeking to reduce costs, rationalising its supply base and trying to bolster its wholesaling arm by introducing higher minimum orders.
But there was only so much it could do when confronted with a collapse in consumer spending and a highly promotional trading environment in which many of its competitors were discounting aggressively.
Moreover, the business was also labouring under a heavy debt burden relative to its size, with management having made clear several times during the last few months that it required fresh working capital.
Talks were held with Next in the summer about a possible equity investment and, more recently, with other potential investors who, apart from the company’s founder and product director Tom Joule, went unnamed. These latterly seemed to be around putting in place a bridging loan in order to give management sufficient breathing space to come up with a longer term financial stabilisation.
Today brought news that those talks had collapsed and, with it, comes administration. What happens next is unclear but Next, which last week snapped up what remained of the collapsed online furniture retailer Made.com after it entered administration, would appear to be a likely buyer for whatever assets are left for sale.
Joules has some 130 outlets – Next is unlikely to want all of those – but also owned a digital business with more than two million active customers. There was a decent business in there fighting to get out.
There is also, though, a nagging sense that this was a company that had lost its way.
Joules dates back to 1977 as Joule and Son, a business founded by Mr Joule’s father, Ian, in Market Harborough, Leicestershire. Mr Joule took over running the business in 1989 when its main lines included shell suits that were supplied to retail multiples like C&A and Littlewoods.
In the early 1990s, though, he diversified into selling equestrian products to the country set – people attending county shows, equestrian competitions and races. This gradually evolved into selling other brands, such as Barbour and Driza-bone, before he set up his own fashion label using the knowledge he had accumulated from hundreds of hours’ worth of face to face meetings with customers.
One particular gap in the market he identified was for highly coloured patterned wellies. The company floated on the Alternative Investment Market in 2016 with a valuation of £140m, at which point Mr Joule sold down part of his stake for a £40m.
By then, Mr Joule had stepped aside from the day-to-day running of the business to focus on being chief brand officer, while in June 2020 the company announced he would be halving the amount of time he was devoting to the business.
It is probable, given the lead times involved in designing products and getting them to the market, that this is when the business began to lose its way – although the shares continued to climb to 310p in June 2021 on the back of booming online sales during the lockdown period. They were suspended on Friday night at 9.25p each.
Mr Joule, who received an OBE in the Queen’s Birthday Honours in June this year, raised his commitment to the business when in September it was announced he was returning as an executive director in the capacity of chief product director.
It was, with the benefit of hindsight, probably too late to turn things around.
In that sense, Joules can be seen as the latest in a line of fashion businesses – others include Superdry, Ted Baker and New Look – that were never the same once the entrepreneur who founded it and who understood what made it tick stepped down from day-to-day management.