By Shanima A
(Reuters) -Struggling British fashion retailer Joules Group on Thursday said its turnaround plan, focused on boosting profitability, was making good progress, weeks after Next Plc abandoned plans to inject funds into the company.
Joules, which sells clothing, footwear and accessories, has been wrestling with finances as consumers turn cautious about spending as surging inflation has fed a cost of living crisis.
British inflation was 9.9% in August and expected to rise further, with the cost of living crunch squeezing households' disposable spending.
This month the company said it was no longer in talks with retailer Next Plc over a potential 15 million pound ($16.52 million) equity investment, without disclosing details.
In August, the company warned of an annual loss due to high levels of discounting. It said a shortfall in full-price sales had squeezed retail margins and it expects to need a waiver on some debt covenants. Its outlook for the full year remained unchanged.
Earlier in the day Sky News reported that Joules is considering an insolvency procedure used by retailers to close loss-making stores and reduce rents.
Shares of the struggling retailer fell 39% on the report adding to its 95% plunge this year.
Joules is working with advisory firm Interpath Advisory on a company voluntary arrangement (CVA) that would, if approved, pave the way for store closures, rent reductions and job cuts, according to the report.
Joules in its statement added that Interpath Advisory is assisting it with an initial assessment of certain elements as part of the development of its turnaround plan.
"Group continues to assess its ongoing financing requirements, including a possible equity raise," it added.
Separately, FTSE 100 retailer Next Plc on Thursday cut its guidance for the full year, saying cost of living pressures are set to rise in the coming months.
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