Written by: Keith Tully
Published: 17th February 2020
The fashion and furniture retailer Laura Ashley is in talks with creditors about emergency funding amid a serious financial crunch for the company and its owners.
Ongoing talks between Laura Ashley’s Malaysian owners MUI Asia and its creditors are being described as make or break with the company having seen its sales slide by 10.8 per cent year on year in the six months to the end of 2019.
“Market headwinds and weaker consumer spending” were largely blamed for those results but shares in the company have slumped in price after it was made clear that the business needs to strike a new financial arrangement in order to stay afloat.
Sales across Laura Ashley’s dozens of UK stores have been flat so far in 2020, with demand having dampened last year in particular for many of the larger items that the company sells.
Having been founded in 1953, Laura Ashley has been a feature of British high streets for decades but retailers throughout the country have been struggling for any sort of sales growth in recent quarters.
According to the British Retail Consortium, sales across all UK retailers failed to achieve any growth at all over the course of 2019, which represents the worse figures on record for the sector across a full year period.
Andrew Choo, Laura Ashley’s chairman, insisted in a statement that there is majority shareholder support for the company’s management team and its ability to implement what he describes as a transformational plan.
“We acknowledge that recent trading conditions, in line with the overall UK retail market, have indeed been challenging,” Mr Choo said.
“There is, however, a robust plan in place to turn the business around and the board of directors is confident and optimistic that the recent appointment of Katherine Poulter [as chief executive] will enable the business to execute this broad-based strategy.”
Although hoping to achieve progress and better financial performance in the coming quarters, statements given by Laura Ashley indicate its bosses consider its turnaround plans to be at an “early stage” of implementation.
It was announced in December 2018 that Laura Ashley would close 40 of its stores in the UK while shifting focus increasingly to online trading and markets in Asia, particularly China.