Struggling retailer Joules explores CVA in bid to avert collapse

Joules, the crisis-hit fashion retailer, is considering turning to an insolvency procedure in a bid to slash its overheads and avert collapse.

Sky News has learnt that Joules is working with Interpath Advisory on a company voluntary arrangement (CVA) that would, if approved, pave the way for store closures, rent reductions and job cuts.

A retail industry insider said on Thursday that Joules had not yet formally decided to launch a CVA or restructuring plan - an alternative mechanism which allows troubled companies to renegotiate their liabilities - but was "seriously looking" at the possibility.

The option has emerged weeks after talks with Next about an injection of funding were abandoned.

Joules, which employs more than 1,000 people and trades from about 130 stores, said earlier this month that it continued "to assess its ongoing financing requirements and is considering alternative options, including a possible equity raise, to allow the company to strengthen its balance sheet".

Analysts and shareholders have cast doubt, however, on its ability to raise equity owing to the calamitous collapse in its share price.

On Thursday afternoon, its shares were trading at 7.48p, giving the company a market capitalisation of just £8.4m.

The details of a CVA proposal are unclear, and would require the approval of creditors.

One source suggested it would be expected to lead to a significant reduction in Joules' store footprint and workforce.

Joules said in August that it was aiming to secure an equity investment of about £15m, after warning that it would deliver a loss bigger than previous market expectations.

It also appointed Jonathon Brown, a former John Lewis and Kingfisher executive, as its new CEO.

The company has hired KPMG to assist with efforts to improve "profitability, cash generation and liquidity headroom".

It has also agreed an extension to banking facilities with its principal lender, Barclays, that would place restrictions on its ability to pay dividends.

Joules has been listed on the London stock market since 2016, having been founded in 1989 when Tom

Joule began selling clothes from a country show stall in Leicestershire.

Mr Joule is now a non-executive director of the company.

Joules plans to announce its full-year results next month.