Struggling fashion retailer Jack Wills is hurtling towards a cash crunch after trading plummeted in the spring.
The preppy chain is understood to be burning through £28m of cash injections arranged by its private equity owner, BlueGem, which is led by Marco Capello. Poor weather hit high street sales and its spring/summer ranges are currently discounted by as much as 50%.
“Trading fell off a cliff two months ago,” a source said. “There will be a crunch time soon when it comes to buying stock for Christmas and it will all depend on what Marco decides to do.”
Another source said the business would need new cash or a restructuring before the end of the summer.
Since taking control of Jack Wills in 2016, BlueGem has pumped in £18m of cash and arranged a further £10m lifeline from Italian businessman Giorgio Girondi.
Jack Wills has fallen hard from its peak in the noughties, when its colourful take on British heritage style proved a hit with students. The retailer was mulling a float as recently as 2015.
Chief executive Suzanne Harlow’s efforts to boost margins and product quality by changing suppliers have been undermined by brutal trading conditions. Also, a store expansion sanctioned by BlueGem has heaped costs on the business.
Jack Wills made pre-tax losses of £29.3m on sales of £139.5m in the year to January 2018. It has a £25m credit line from HSBC, which has some security over the company’s assets.
The chain could pursue a company voluntary arrangement (CVA) to close shops and cut rents, although BlueGem has so far been reluctant to explore one.
Landlords have been emboldened by their success in negotiating down the rent cuts demanded in Arcadia Group’s recent CVA.
On Wednesday, Monsoon Accessorize landlords will vote on the chain’s proposal to reduce rents on 135 shops. They are unhappy with the level of financial information provided by the company, claiming they are unable to make a judgment on whether it will collapse without a CVA.
Monsoon said it had engaged in detailed discussions to find a position fair to all creditors.
