Talks between popular retailer Joules and high street giant Next have hit a stumbling block, casting doubt on Next’s £15 million investment in the struggling company. This news comes after Joules issued a profit warning, stating that recent trading has significantly weakened and first-half profits will be impacted.

The two companies have been in discussions since August, but have failed to reach an agreement on the terms of the investment. Sources say that Next did not receive enough financial information to make a formal proposal to the Joules board. Furthermore, there are doubts that Next is willing to proceed with a deal for at least 33p per share, which was Joules’ valuation at the start of the talks. Since then, Joules’ share price has continued to decline, closing at 25.5p on Friday.

However, a spokesperson for Joules has stated that they are still engaged in positive discussions with Next about adopting Next’s Total Platform services for long-term growth plans, as well as a potential equity investment. They caution that there is no certainty regarding an agreement and will provide further updates when appropriate.

Insiders note that while a deal is still possible, time is running out. Next has not yet commented on the matter. Joules had been seeking an equity investment of around £15 million, but its current market value is only just under £30 million due to the decrease in share price. They had previously stated that the deal would occur at no lower than the current market price. However, it is unlikely that Next CEO Simon Wolfson would be willing to pay such a premium for a stake in the company.

Joules, which operates 130 stores and has over 1,000 employees, has faced challenges in recent years, both externally and internally. The company has enlisted the help of KPMG to improve profitability, cash generation, and liquidity headroom.

While the outcome of the talks is uncertain, this situation highlights the difficulties that Joules is currently facing and the need for a strategic partnership to overcome them. With the retail industry constantly changing, established players like Next have the potential to provide valuable support and resources to struggling companies like Joules.

Additional Links:
Reuters: Struggling clothing retailer Joules’ investment talks with Next hit hurdle
BBC News: Next shares slide after Joules talks hit hurdle