(Bloomberg) -- A British mechanic turned multimillionaire entrepreneur who “dabbles” in the stock market has built up a large stake in Joules Group Plc and hinted he could even consider injecting capital to help the struggling retailer. 

Richard Teatum, the owner of Stoneacre Motor Group, a network of car dealerships across England, bought a 8.9% stake in Joules, a regulatory filing revealed late Thursday. The shares rose as much as 28% on Friday on the news that this little-known investor is now the third largest shareholder in Joules which is fighting to stave off collapse.

“They’re a real cheap buy and they’re massively undervalued so I’ll continue buying them at these prices potentially,” said Teatum in a phone interview. “If they implement the turnaround plan they’ll more than survive, I think they’ll do well.”

Joules was founded in Market Harborough in England more than three decades ago by Tom Joule and gained a name for itself producing colorful country attire, such as bright pink Wellington boots. The retailer, which also sells childrenswear and products for the home, now has more than 130 stores but has been hit by multiple profit warnings this year and the stock has fallen 94%. 

Read more: Joules Falls Amid Profit Warning, Seeks Debt Covenant Waiver

Talks with Next Plc to become a minority shareholder fell through last month and the brand is reported to be considering a company voluntary arrangement. The founder Joule, who is the largest shareholder, has returned as product director and is helping lead a turnaround plan focusing on better pricing and quicker times to market. 

The rise in shares Friday is likely driven by Teatum’s purchase, said Clive Black, a retail analyst at Shore Capital.

“It suggests someone has a bit of confidence about the business,” said Black. “It doesn’t mean Joules is out of the woods, it needs capital, but it’s maybe a moment of relief amongst the darkness.”

Teatum said he has spent more than the current value of around £925,000 ($1 million) on the holding. He is open to considering injecting more capital into the retailer, which is considering a possible equity raise to strengthen its balance sheet among other options. 

Like most retailers, Joules is battling with the cost-of-living crisis which is sapping consumer demand for non-essential purchases. Yet Teatum thinks the average Joules customer is probably more resilient and will still spend. 

With the pound so low, a US buyer could also be interested in Joules, he added. 

Teatum has previously traded in automotive shares and this is his first time venturing into clothing retail. He previously built up a 5% stake in Vertu Motors Plc which he has since sold.

Stoneacre sells new and used cars across over 100 dealerships and is the largest Suzuki and Fiat dealer in the country with around 3,000 employees. The group made a £40 million profit in the year to April, according to Teatum.

“This is a bit of a sideline really, buying and selling shares,” Teatum said.

©2022 Bloomberg L.P.