July 18, 2016
When Julian Blades met his wife-to-be Rhona in the mid-eighties, it wasn’t just the start of a personal relationship but a business one, too. Julian had recently returned from Europe where he worked for Barbour, while Rhona was head of fashion at what was then the College of Arts and Technology in Newcastle.
Within weeks, the pair had decided to open a fashion store that offered something unique to the North East’s dedicated followers of fashion.
“The aim was to bring a slightly more continental offering,” explains Julian. “We wanted to source key fashion brands, such as Hugo Boss and others, and develop a key look of personal style that we felt was relevant to the market.”
The Jules B store, which opened on Acorn Road in Jesmond in 1985 was an instant success and just 12 months later, it was extended to accommodate men’s fashion – Julian heading the menswear and Rhona remaining in charge of the womenswear.
Continued success led the pair to open a second brand – The Conservatory – which stocked more informal fashion and lesser known designer brands, as well as additional Jules B outlets in Kendal.
A Jules B store was also briefly opened in Newcastle city centre but it was found that the brand’s dedicated customers preferred the more personal, out-of-town shopping experience.
Julian and Rhona were subsequently planning to further extend the Jesmond outlet when they started to recognise a change in shopping habits.
“The fashion retail sector, as a whole, was beginning to see a decline in footfall and instead people were turning to the internet to shop,” says Julian. “As a result, we started looking into the digital side around six years ago.”
According to Julian, Jules B’s digital offering grew incredibly quickly – even the global recession didn’t seem to dim the growth in turnover, which peaked at £8 million.
“Our in house book keeper was showing us really good figures on a monthly basis, which gave us the confidence to invest,” explains Julian. “We were ploughing everything back into the business and spent money on an EPOS system and the latest technology – as the turnover just kept on increasing.”
But suspicion that all was not as rosy as it seemed first arose when Julian returned from a business trip two years ago to a massive tax demand from HMRC.
“I called [our book keeper] straight away,” recalls Julian. “It was a Sunday and, strangely for him, he was in the office. I immediately sensed that something was wrong.
“Once we got access to his computer it was like opening Pandora’s Box. There were seemingly endless demands from HMRC and our suppliers. I couldn’t believe the debt we were in. I was incredulous.”
Julian swiftly recruited a finance director, David Murgatroyd, who had extensive experience in fashion retail accounting.
David started unravelling the financial jumble and discovered Jules B was in around £1.5 million in debt.
“I had people telling me that there was no way we could turn it around and I should shut the doors on Jules B,” Julian admits.
“But I had almost 100 people working for me and the thought of putting them out of a job was inconceivable.”
Julian and Rhona instead decided to personally put as much money as they could into the business, which, including help from their family, totalled around £1.25 million.
The pair then went about visiting all of their suppliers to explain – candidly – what had happened.
“Because of the debt, our credit rating had been annihilated but, thankfully, because of the strong relationships we had built up over the years with our suppliers, most were understanding and were helpful with our payment terms.”
Meanwhile, David, working with Andrew Wilson from UNW, set about reinstating the accounts for the previous four years and developing a projected strategy for the next two.
Twenty months in and thanks to the hard work from everyone involved – in addition to continued strong digital sales – the company has reported a £470,000 profit for the six months ending in January 2016.
For Julian and Rhona, they have endured enormous pressure and sleepless nights since 2014.
“Until you’ve been there, you probably don’t realise how terrifying it is,” says Julian. “You ask yourself, what if I lost everything? How would I start again? We put so much effort into Jules B the first time. Do we have the energy to do it again?”
Julian admits that he was far too trusting of his bookkeeper and his willingness to delegate financial matters this to others unchecked that ultimately lead to the company’s near destruction, but maintains that he has learnt his lesson.
There have since been dramatic changes to the culture and processes at Jules B, ensuring a similar episode never happens again.
Julian explains: “We have introduced more visibility and structure into the company’s finances as well as better reporting, with the EPOS system now providing very detailed levels of reporting, allowing us to make informed decisions about what we buy and how much we buy.
“In addition, we also have much better communication throughout the company and hold regular board meetings with key personnel.”
Julian continues: “The past two years also forced us to cut our overheads, which wasn’t very pleasant at the time but, actually, we are now working much more efficiently.”
So what advice would Julian give other business owners?
“Get your financial house in order. Make sure your bookkeeping is water tight. You can’t make any decisions about the business unless you’re getting the right financial information.”
The team at Jules B can now focus on future growth, while maintaining the high standards of service and choice fashion labels that have built the brand’s reputation over the past three decades.
Pulling the business back from the brink has also had a profound impact on Julian.
“Personally, I’ve never felt so strong or more confident than I’m feeling now, having been through what we have.
“I know it’s a cliché,” he adds, “but it really is true: what doesn’t kill you makes you stronger.”
Julian concludes: “There is now much greater financial discipline, structure and stability within Jules B and with that in place, we can proudly look to the future.”