Jules B returns to growth after being defrauded
Family-owned North East designer clothing and accessories business Jules B is back in the black, after suffering significant losses due to fraudulent accounting that almost saw the company plunge into administration.
The company, founded in 1984 by husband and wife team Julian and Rhona Blades, has seven stores in Newcastle, Yarm and Kendal and a significant online fashion business that contributes 70 per cent of its £10 million annual turnover. A major North East success story, Jules B employs almost 100 people and has won the prestigious Drapers Magazine Best Independent Fashion Store four times.
But its survival came under threat in 2014 when the business discovered that its bookkeeper had falsified four years of accounts and failed to pay almost £1 million of VAT to HMRC.
Julian said: “The level of deceit and cover up was extraordinary. Each year the bookkeeper delivered accounts showing healthy profits, so we continued to invest heavily in store refits and building the internet business.
“The business was growing so fast that we spent all our time at the front end doing what we do best and trusting someone too much with our finances, which was a cataclysmic mistake.”
Jules B brought in David Murgatroyd, who had worked at North East fashion wholesaler Visage, as its new financial director. He created a new structure for the business and reinstated accurate accounts with HMRC. However, four years debt had to be repaid, leaving the company in serious financial trouble.
The company went into talks with administrators but the Blades refused to give up the business without a fight. Stephen Clarke from Barclays worked to help keep Jules B afloat by putting it into special measures and supporting its plans for recovery.
Stephen said: “Julian and Rhona had built up a strong North East brand and were determined to ride out the problems they faced.
“We were able to provide support to keep the business going and we’re delighted Jules B is now back on track.”
Jules B also benefited from advice from Newcastle-based accountants UNW, following a chance meeting between Julian and UNW managing partner Andrew Wilson in the Jesmond store. Andrew offered to sit in on meetings to provide support and offer advice throughout this critical period.
The company cut its costs radically, with Julian and Rhona taking themselves off the payroll and some key members of staff also volunteering to take a pay cut. Suppliers were informed why Jules B’s credit rating had plummeted but the majority stood by the business. Jules B has now signed up as a client with UNW.
UNW’s Andrew Wilson said: “My initial involvement with Julian, Rhona and the team was very much in a consultative capacity, helping them to navigate meetings with bankers and a range of advisors. While we have lots of experience in these situations, business owners often don’t so my role was to handhold and help them navigate the challenges faced.
“Since our appointment, we’ve been able to advise in a variety of ways. The team at Jules B has utilised a wide range of expertise from UNW related to VAT, PAYE and national insurance, incentivisation plans, corporate tax and we even seconded in a member of our finance team for a period of time.
“It’s taken a little while but the shift in financial position has been significant and the outlook is a lot more positive. It’s fantastic to see the business now very firmly back on its feet and to have assisted with its transformation through a very difficult period.”
The survival and recovery plan is now paying dividends and the company is once again on a growth trajectory and has repaid the majority of its third party debt. Now 20 months into its detailed two-year business forecast, Jules B has hit almost every target and has reported a £470,000 profit for first six months ended January 2016.
Julian said: “Andrew’s knowledge and advice was priceless and allowed us to feel much more positive about the chances of survival. Needless to say, we are now happy to be paying clients of UNW, whose team we regard extremely highly. It is extremely comforting to know that we have access to real expertise as and when we need it.
“The future is once again looking bright. We have learnt some extraordinary lessons throughout this time and both the business and ourselves are better for it and we are excited about the many opportunities that lie ahead of us now we are stronger.”
To learn more about Jules B, please visit www.julesb.co.uk
Paul Callaghan is co-founder and the Chair of The Leighton Group, the North East-based set of software, technology, communication and
The Charity Commission has recently announced updated guidance for charity trustees on when to report incidents involving the charity’s partners
We are delighted to share with you our latest Charity Group Bulletin, available for download via the following link. Click
UNW’s latest update on topics of financial interest to all dentists, which includes the results of the NASDAL goodwill survey
When FRS 102 – the Financial Reporting Standard applicable in the UK and the Republic of Ireland – was first