Street giant Next is in talks to buy a major stake in Joules, the struggling fashion and lifestyle chain.
Sky News has learned that Next has been in talks for several weeks to buy up to a 25% stake in the smaller London-listed retailer.
City sources said this weekend that discussions are unlikely to lead to an agreement and that any announcement is still possible at short notice.
If completed successfully, a transaction that would land Joules in trouble becomes the latest in a string of high-end street names to join Next’s online platform as it continues to expand beyond the core brand that has made it became an industry giant.
Joules, which operates from about 130 stores and employs more than 1,000 employees, has endured an increasingly difficult time as inflation pressure pervades the retail sector.
Last month, the company hired KPMG to support its efforts to improve “profitability, cash generation, and liquidity.”
It later said it had agreed to expand banking facilities with its main lender, Barclays, which would place restrictions on its ability to pay dividends.
Joules’ valuation has fallen by nearly 90% in the last year, even as top sales growth has maintained fairly well.
At Friday’s closing price of 33p, it had a market valuation of just £37m.
For Next, the acquisition of a 25% stake in Joules would cost a small sum in the region of £10 million at the smaller company’s current valuation.
It remains unclear this weekend how the share purchase will be structured and whether it will include administrative rights.
Shoppers walk past a branch of the Next retail store in London
Next happened joint ventures with brands including Reiss and Victoria’s Secret in recent years, while it also recently agreed to a deal to take full ownership of the children’s products retailer JoJo Maman Bebe with hedge fund Davidson Kempner.
Under Lord Wolfson, chief executive, Next has diversified into a broader mix of retail and lifestyle products, taking advantage of multiple defaults among rivals such as Arcadia Group and Debenhams.
Next is among the contractors for TopShopcrown jewel in Sir Philip Green’s former street empire, but eventually withdrew from the race, leaving the pitch to ASOS.
EY is said to be advising Next on talks with Joules.
Joules has been listed on the London Stock Exchange since 2016, founded in 1989 when Tom Joule started selling clothes from a country show stall in Leicestershire.
Mr. Joule is currently the company’s non-executive director.
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Joules is chaired by Ian Filby, a former DFS chief, while chief executive Nick Jones will step down in the coming months.
Joules plans to release full-year results in September.
This weekend, Next and Joules declined to comment.
