Laura Ashley today said it was to file for administration after coronavirus proved the final straw after days of make-or-break talks to gain further funding. The move is expected to put more than 2,700 jobs at risk, including an estimated 1,300 in its shops.
The fashion-to-homewares retailer, ranked Top100 in RXUK Top500 research, said earlier this week that it was in talks to arrange extra working capital financing. At the time it said that trading had been up by 24% year-on-year in the seven weeks to March 13. But today it said that recovery had gone. Covid-19 had had “an immediate and significant impact on trading, and ongoing developments indicate this will be a sustained national situation.” Talks around further funding had been advanced but it was clear the money would not come in time to save it.
As a result, directors have decided that, having explored all available options, it was now time to appoint administrators from PwC.
Commenting on today’s news, Amy Higginbotham, retail analyst at data and analytics company GlobalData said: “Laura Ashley blames recent poor trading (at least in part) to the Covid-19 outbreak, and though this has no doubt had a significant impact on its performance over the past week or so, the retailer has been struggling for a while.
“The brand has long been tired and has struggled to regain relevance in both its fashion and home divisions. Financially weak retailers, of which there are many, are likely to follow Laura Ashley into administration given the current crisis. Those retailing non-essential purchases that can easily be deferred will be particularly badly hit.”
The recent update that showed sales in the six weeks to March 7 were up by 27.7% on the same time last year, while gross profit was 22.2% ahead had marked something of a sales turnaround in the business. Previously, Laura Ashley had reported falling sales and profits in the first half of its financial year, to December 31. Group sales of £109.6m were down by 10.8% over the period, while online sales were also down, by 15.5% to £22.2m. Pre-tax losses came in at £4m, widening from £1.5m a year earlier.
By the end of the half-year, the group operated 153 UK stores and sold to 10 European countries from its UK website. It also had 80 franchised shops in 20 markets around the world. In its 2019 annual report, the retailer said it employed more than 2,800 people, including 1,305 in its shops.
Image: Screenshot of lauraashley.com