Joules Group PLC (AIM:JOUL) has confirmed press reports that as part of its efforts to improve profitability, cash generation and liquidity headroom, it has called in KPMG debt advisory.
Shares in the British fashion chain were down 23.99% at 25.20p in early trades in London.
The statement came in response to an article in The Sunday Times, which said the struggling company was seeking a cash lifeline, with KPMG consultants exploring options including raising fresh capital after inflationary pressures drained the retailer’s cash reserve.
Joules said as of 29 May 2022 it had net debt of £21.4mln, giving it £11.3mln headroom within its banking facilities, in line with the board's expectations.
"Whilst the group continues to manage its cash resources carefully over its seasonal borrowing peak, it expects to have sufficient liquidity to manage its working capital requirements over this time," it said.
In a trading update in May, the company reported it had estimated net debt of £22mln and liquidity headroom of £11mln, and said since challenges are expected to persist in the first half of fiscal 2023, the board is cautious about the near-term outlook.
The company said today that it is "making good progress against previously announced key initiatives aimed at simplifying the business and optimising the cost base to improve long-term profitability", including implementing significant changes to its wholesale operations to focus on fewer, more profitable wholesale accounts, as well as enhancing and simplifying its end-to-end product processes in order to reduce costs and shorten lead times.