Joules confirms talks with Next over £15m minority stake

Joules confirmed on Monday that it is in talks with retailer Next about the acquisition of a £15m stake in the lifestyle brand.

Responding to media speculation over the weekend, Joules confirmed a potential equity investment raising proceeds of around £15m "at no less than Joules' current market price, which would result in Next becoming a strategic minority shareholder in the group". The equity investment would be subject to shareholder approval.

Joules also said it was in talks with Next about adopting its Total Platform services to support long-term growth plans.

"There can be no certainty these discussions will lead to any agreement," the group said, adding that a further announcement will be made if and when appropriate.

At 0930 BST, Joules shares were up 45% at 47.95p.

AJ Bell financial analyst Danni Hewson said: "Joules has been struggling this year, with disappointing sales, supply chain problems and rising costs. Once a shining star in the retail sector, Joules saw its share price collapse after a string of profit warnings.

"Next doesn’t typically buy companies outright so it seems unlikely that an initial investment in Joules will lead to a full takeover. Instead, expect to see it become an influential shareholder and for more of Joules’ products to appear on Next’s website.

"Next has a system called Total Platform, which enables third party retailers to grow their sales without large capital costs, operational risks or time developing sophisticated infrastructure. This platform is already used by the likes Gap UK, Reiss and Victoria’s Secret, with Next having also acquired equity stakes in these businesses.

"In essence, Next can offer more products on its website which makes it more attractive to customers, and it also earns a fee for handling the e-commerce needs of third parties."