According to reports, retail giant Next is in discussions to acquire a 25% stake in fashion and lifestyle retailer Joules. This comes as Next continues its trend of acquiring stakes in both successful and struggling businesses.

The negotiations between Next and Joules have been ongoing for several weeks, and speculation began to circulate after a news report over the weekend. On August 8, Joules confirmed that discussions with Next were taking place.

Joules stated that it was in talks with Next regarding the adoption of Next’s Total Platform services, which would support Joules’ long-term growth plans. In addition, the retailer confirmed that it was exploring the possibility of a £15 million ($20 million) equity investment from Next. If the investment goes through, Next would become a strategic minority shareholder in Joules. However, approval from Joules’ shareholders would be required. The outcome of the discussions remains uncertain, and further announcements will be made if necessary.

It is likely that any equity stake acquired by Next would involve Joules utilizing the Next Total Platform. This platform is known for its efficiency and effectiveness, and it could greatly benefit Joules.

Joules has faced both successes and setbacks in recent years, with the pandemic and other external factors impacting its performance. Despite having over 130 stores and employing more than 1,000 people, the company has experienced significant losses in the past year. Its share price has also dropped by nearly 90%, resulting in a market capitalization of just £37 million ($50 million). As a result, the 25% stake acquisition by Next could be seen as a relatively inexpensive opportunity for the retail giant.

The details of the potential deal are still unclear, including whether there would be an option for Next to increase its stake in Joules. However, based on previous stake purchases with other companies, it is possible that Next could include such provisions.

Next, originally known for its own label, has expanded its business over the years to include multi-brands. The company not only sells third-party brands but also invests in other businesses and owns outright ownership of brands. It has licensing agreements with Ted Baker and partnerships with Laura Ashley, Gap, and Victoria’s Secret. Next is also part of a consortium that owns Jojo Maman Bébé and currently holds a 25% stake in Reiss, with the option to increase its ownership.

Given Next’s extensive connections to various brands through licensing and ownership, it is often considered a potential bidder when brands are put up for sale. The retail giant has been actively diversifying its portfolio and seeking strategic investments within the industry.

Useful links:
1. Next
2. Joules