Next rescues fashion chain Joules saving 1,450 jobs

Clothing chain Joules has been rescued from administration by retail giant Next and founder Tom Joule.

Under the £34m deal, Next says it intends to keep about 100 Joules stores open and save 1,450 jobs.

However, 19 stores will be closed with immediate effect with the loss of 133 posts.

Joules, known for its premium, brightly-coloured clothes, collapsed into administration last month after failing to secure emergency investment.

Like other retailers, the Leicestershire-based firm has struggled against a backdrop of the coronavirus pandemic and cost-of-living pressures.

Under the terms of the deal, Next will take a 74% stake in the business, with Tom Joule owning the rest. Next has also paid £7m to buy the current Joules head office.

Next will continue to operate Joules' website but will also sell Joules-branded clothing through its own e-commerce platform from 2024.

The chief executive of Next, Lord Wolfson, said: "We are excited to see what can be achieved through the combination of Joules' exceptional product, marketing and brand building skills with Next's Total Platform infrastructure."

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Tom Joule, who founded Joules in 1989, said the deal would protect the future of the company for its "loyal customers, its employees and also for the town of Market Harborough, which have been so central to Joules' success".

Mr Joule stepped back from designing Joules' products in 2019, but recently returned to be the company's product director.

Next said that after completion of the rescue deal, Mr Joule would "take the lead in re-establishing the clear identity of both brand and product".

This is a good outcome for Joules. And it's the second business Next has bought out of administration in the space of about a month.

Joules had been seen as a success story, valued at £140m when it floated on the stock exchange in 2016. Today though, after tough competition, Next snapped up most of it for £34m.

Joules had lost its way. It spent £20m on a new head office less than a year ago and it also bought an online furniture accessories business, adding complexity and cost.

Store closures are painful but this swift rescue deal means Joules will survive as a brand on the High Street as well as benefit from Next's online infrastructure to drive sales.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said the deal was "not without risk" for Next.

''The deal with founder Tom Joules will see the distinctive wellies, coats and fleeces sold alongside its directory of other brands at a time when consumer spending power has taken a hit," she said.

"Although this is a tried and tested strategy with Reiss, Gap and Victoria Secret Secret also sold on the Total Platform [Next's e-commerce platform], with Next scooping up commissions on sales there are niggles of worry that this retail powerhouse could soon be biting off more than it can chew."

"Next also has to devote attention to the effect of soaring inflation on its wider business, which is looming large over the group's customer base, and regardless of management's best efforts, it's likely to squeeze margins," she said.

Joules is the latest brand to be picked up by Next after getting into trouble.

Last month, Next bought furniture retailer Made.com's brand name, website and intellectual property after that company fell into administration.

In April, Next took a 44% stake in baby goods retailer JoJo Maman Bebe as part of a deal which saw the rest of the business acquired by a group of finance firms.

There are fears other retailers could struggle as the cost of living soars.

High Street giant Marks and Spencer has warned of a "gathering storm" of higher costs for businesses and pressure on household budgets, adding that "all parts" of retail will be affected.