Joules Group PLC (AIM:JOUL), the struggling lifestyle brand which earlier this month hired KPMG debt advisory to help it boost profits, announced an extension to its banking facilities, providing more financial headroom.
The company said it received credit approval for a further £5mln headroom on its borrowing facilities with Barclays until November 2022 to support working capital requirements over the forthcoming seasonal borrowing peak. This is in addition to its existing £15mln headroom.
The London-listed group also updated on trading, saying that due to additional cost reductions, it anticipates adjusted profit before tax and adjusting items for the year to 29 May 2022 to be "slightly ahead" of current market expectations, despite the cost-of-living crisis hitting consumer spending.
READ: Joules confirms KPMG's help enlisted to improve cash position
Retail sales grew 8.5% year-on-year for the first six weeks of the current financial year, continuing previous trading trends. Gross margins are under “significant pressure” with consumers favouring markdowns as a result of a promotional environment, Joules noted.
Progress is being made on simplifying the business to improve profitability, such as focusing on long-term profitable partnerships, shortening product lead times and diversifying ethically sourced suppliers, it added.
Under the credit agreement with Barclays, Joules will be restricted from paying dividends for the period that the facility is in place.
The company said "positive" talks with Barclays on its medium-term financing are continuing and are expected to conclude by September.
Joules said it expects to have sufficient liquidity to manage its working capital requirements during this time, including the repayment of the extended facility in November 2022, should it be used.
The company had net debt of £17.7mln on 26 June.