By Scott Wright

SHARES in upmarket fashion-to-homeware retailer Joules Group have been hit by a fresh rout amid speculation that a potential investment deal with Next may be in doubt.

The stock fell by a further 7.8 per cent after investors responded to reports that talks over a £15 million investment from the high-street giant had faltered. The talks have also seen the two companies explore Joules adopting the Next online trading platform.

Joules responded to the speculation with a statement suggesting a deal could still happen.

The company, which has around 130 stores, said in a statement: “Further to the announcement on 19 August 2022, the Group continues positive discussions with Next Group 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.”

Yesterday’s share price reverse was a further blow in a difficult summer for Joules. Earlier this month, the beleaguered company issued a profit warning after seeing full-price sales struggle because of the heatwave and fragile consumer confidence.

Joules reported on August 19 that it expected to make a “significant loss” for the first half, and slide into the red for the full year. That came as it said sales of outerwear, rainwear and wellies had been “adversely affected” by the hot weather, adding that these struggles had been “compounded” by “ongoing subdued consumer demand”.

Russ Mould, investment director at stockbroker AJ Bell, said yesterday: “Posh wellies seller Joules’ latest update – effectively decrying media reports that an agreement with Next for the larger retailer to invest in the business was breaking down – shows the desperation of its situation.

“Businesses like Joules, which are neither luxury brands nor bargain basement propositions and sell discretionary items, look particularly vulnerable against a highly squeezed consumer backdrop.”

Joules’ woes underline the difficulties that retailers are facing amid the cost-of-living crisis. With inflation climbing to 10.1 per cent in July, and forecast to rise further still as energy prices continue to escalate, expenditure on goods such as clothing and homeware is coming under growing pressure.

Joules said in its most recent trading update on August 19 that it has had to cut prices to engage customers in a “highly promotions-driven retail landscape”, noting that margins had fallen by six percentage points in the year to date. Its update came on the day that official figures showed that UK retail sales volumes had increased by 0.3% in July, following a revised fall of 0.2% in June. The Office for National Statistics noted that feedback from online retailers pointed to a range of promotions in July, which boosted sales.

Danni Hewson at AJ Bell said at the time: “Herein lies the problem for so many retailers. They are worried that consumers are under financial pressure so they’re panicking and discounting their goods thinking it’s better to sell something at a lower price than not at all.

“One of the biggest risks for retailers is getting sucked into the eternal discount war. Customers will become accustomed to enjoying money-off promotions.”

Shares in Joules have fallen by more than 80% since the start of the year.

The stock ended the day at 23.5p last night, down 2p on the day.