Next is in talks to acquire a substantial interest in the struggling fashion and leisure products retailer Joules.
The retail giant is in detailed negotiations to acquire a 25 percent stake in Joules, a company whose shares have plummeted over the past year.
Next has been in negotiations to purchase up to 25 percent of the smaller London-listed business for several weeks.
This weekend, city sources indicated that an agreement was not a certain conclusion and that any announcement could take some time.
A successful purchase would make ailing Joules the second high street brand to join Next’s online platform, as Next continues to expand beyond the core brand that has made it an industry titan.
As inflationary pressures inundate the retail industry, Joules, which operates around 130 locations and employs over a thousand people, has endured a challenging year.
It engaged KPMG last month to assist with attempts to increase “profitability, cash creation, and liquidity headroom.”
It later announced that it had agreed to an extension of its banking facilities with its primary lender, Barclays, which would limit its capacity to pay dividends.
The valuation of Joules has decreased by approximately 90 percent over the past year, despite the fact that top-line sales growth has been relatively stable.
At Friday’s closing share price of 33 pence, its market value was only £37 million.
At the current worth of the smaller firm, acquiring 25 percent of Joules would cost Next a nominal payment of around £10 million.
This weekend, it remained unclear how the purchase of a stake would be structured and whether or not it would involve governance rights.
In recent years, Next has formed collaborative ventures with labels such as Reiss and Victoria’s Secret, and it recently reached an agreement with hedge fund Davidson Kempner to acquire full control of baby products shop JoJo Maman Bebe.
Under the leadership of its CEO, Lord Wolfson, Next has diversified into a wider range of retail and leisure products, capitalising on the bankruptcy of competitors like as Arcadia Group and Debenhams.
Next was one of the bidders for TopShop, the crown jewel of the erstwhile high street empire of Sir Philip Green, but ultimately withdrew, leaving the field open for ASOS.
EY is reportedly guiding Next in its negotiations with Joules.
Joules has been listed on the London stock exchange since 2016, having been started in Leicestershire in 1989 by Tom Joule, who began selling clothing from a rural show booth.
Mr. Joule is currently the company’s non-executive director.
Ian Filby, the former head of DFS, serves as chairman of Joules, while CEO Nick Jones will step down in the coming months.
In September, Joules aims to disclose its full-year results.
Next and Joules declined to comment this weekend.
