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| 2 minutes read

Winter is coming... is Joules simply one of the first to feel the "cold" recession bite?

Joules is the latest retailer to announce that it is appointing administrators, following its failure to attract investors to save the business.

Despite boasting a customer base including the Princess of Wales and Taylor Swift, increased transport and labour costs coupled with a decline in consumer spending amid a cost-of-living crisis whittled the brand’s share price on 11 November 2022 to just 9p per share. To put this into context, Joules’ share price – when listed on London’s AIM stock exchange market in 2016 – was 160p.

In mid-September, Joules announced that discussions with Next regarding a potential investment were over. Since then, Next has of course acquired for £3.4m. The furniture brand entered administration in early November also due to decreased consumer spending. Despite experiencing a surge in demand during COVID-19, as people were forced to spend more time indoors, demand slumped as we emerged from the lockdowns; the retailer entered administration holding an excess of stock it simply could not shift.

Administration serves as a rescue mechanism for companies which retain a sound underlying business and value – Joules has some headroom, reportedly valued at £11.4m. Following the filing of a notice of intention to appoint administrators, Joules will be afforded a 10-day moratorium allowing it breathing space from creditors initiating or continuing legal action against them. During this window, the brand will likely search for a buyer of its business. Despite’s success in finding a buyer, only its brand, domain names and intellectual property were bought, which means around 400 redundancies are expected. It will be interesting to see if there is anyone with an appetite to acquire Joules and which assets are to be cherry-picked; at stake are 132 shops and 1,600 employees.

The founder, Tom Joule, returned to an executive role this September in an attempt to simplify the business and improve operations, but the changes to the business model he sought to usher in proved to be too late. This goes to highlight the importance of identifying potential financial issues as early as possible such that directors can feasibly at least try and explore options to rescue the company, or failing that, the business. Given the current economic climate, the spiralling number of insolvent liquidations - at a near all-time high for the third quarter of this year – shows "failure" rather than "rescue" is proving to be the prevailing trend. However, administrations do appear to be "on the up", with a 5% year-on-year increase in administrations in September 2022 (when compared to September 2021).

Winter is coming…. the question remains how many companies, especially within the retail and casual dining sectors, will be capable of "rescue" or otherwise be able to winter the storms in the face of the predicted recession?

Joules is to appoint administrators after the UK clothing brand failed to find an investor to save the business, in a move that could put 1,600 jobs at risk.


restructuring and insolvency, retail