The struggling fashion chain Joules’ hopes of securing a lifeline from the high street behemoth Next have hit a stumbling block days after it issued a fresh profits alert.
Sky News has learnt that the two companies are not close to agreeing the terms of an investment from Next more than three weeks after confirming they were in discussions.
City sources said this weekend that Next had not received sufficient financial information to enable it to make a formal proposal to the Joules board.
There were also doubts that the clothing retail giant would be prepared to proceed with a deal at 33p-a-share or more – Joules’ valuation when the talks were revealed by Sky News earlier this month.
Since then, shares in the company have continued to slide, closing on Friday at just 25.5p.
In a statement on Sunday, a Joules spokesperson said: “Joules continues its positive discussions with Next plc about both adopting its Total Platform services to support its long-term growth plans and a potential equity investment.
“There can be no certainty that these discussions will lead to any agreement, and further announcements in this regard will be made if and when appropriate.”
One insider said a deal was still possible, but that time was running out to agree a transaction.
Joules said earlier in August that it was aiming to secure an equity investment of about £15m, although the company now has a market value of just under £30m following a calamitous fall in its share price.
It also said the deal would take place “at no less than Joules’ current market price”.
One insider suggested there was “no way” that Next chief executive Lord Wolfson would agree to pay a premium for a stake in Joules.
Nine days ago, it told the stock market that trading in the five weeks since the end of its financial year had “softened materially” and that it would deliver a loss bigger than previous market expectations.
It also announced the appointment of Jonathon Brown, a former John Lewis and Kingfisher executive, as its new CEO.
If a deal is successfully completed, it would make Joules the latest high street beneficiary of Next’s financial and operational muscle.
Next has struck joint ventures with brands including Reiss and Victoria’s Secret in recent years, while it also recently agreed a deal to take outright ownership of the baby products retailer JoJo Maman Bebe alongside hedge fund Davidson Kempner.
Joules, which trades from approximately 130 stores and employs more than 1,000 people, has endured a difficult time as inflationary pressures hit the retail sector.
Last month, it hired KPMG to assist with efforts to improve “profitability, cash generation and liquidity headroom”.
It subsequently said it had agreed an extension to banking facilities with its principal lender, Barclays, that would place restrictions on its ability to pay dividends.
EY is advising Next on its talks with Joules.
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 full-year results in October.
A deal with Next would require the approval of Joules’ shareholders.
Next declined to comment.