Jack Wills problems deepen as UK fashion retail remains tough
today Jul 1, 2019
Jack Wills has endured further tough trading and is heading towards a cash crunch, it was claimed at the weekend. The company is reportedly “burning through” the £28 million cash injection arranged by its majority owner BlueGem as the cool, wet weather in late spring dented sales of warm weather clothing.
An unnamed source told the Sunday Times that the retailer’s trading “plummeted” this spring with the source adding that it “fell off a cliff two months ago.”
Jack Wills didn't comment on the report, but it wouldn't be the only UK fashion retailer to suffer this year with a number of companies serving a wide range of ages and tastes reporting sluggish trading in recent months.
The real problem comes when the companies concerned have a limited cash flow, as we saw with Bonmarché recently. The big issue for Jack Wills is that it now needs to buy-in stock for the crucial Christmas season and if it's using cash as quickly as the Sunday Times claims, much now depends on what BlueGem chief Marco Capello decides to do.
The newspaper also quoted another source saying that a further cash injection or a restructuring plan could be on the cards before the autumn.
BlueGem has controlled Jack Wills since 2016, but its time in charge hasn't been very happy. The once-high-flying retailer, which had been considering an IPO as recently as 2015, has been impacted by the difficult conditions on UK high streets, conditions that have also undermined a number of even bigger names.
In the year to January 2018, the company generated sales of almost £140 million but its pre-tax losses totalled over £29 million.
There have been no hints that company would pursue a CVA, a route taken by many of its retail peers, but if it did, it would not do so in a very sympathetic environment. Landlords are less prepared to play along after taking a hit adding up to billions of pounds due to CVAs already operational or planned.
Another major name, Monsoon Accessorize, will see landlords voting on its own CVA this week and it's unclear how much support its proposals have.
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