Laura Ashley today confirmed that its majority shareholder is in talks with its lenders about access to working capital amid falling retail sales and a falling share price. The amount it can borrow has been reduced as its share price has fallen. The news comes days before Laura Ashley’s half-year results are expected on Thursday, which, the retailer said today, will show group sales fell by 10.8% in the six months to December 31 2019. Laura Ashley’s share price closed at 3.25p on Friday and since the markets opened today has fallen by 43% to 1.85p, at the time of writing.
The multichannel homewares-to-fashion retailer, ranked Top100 in RXUK Top500 research, today said that its lender, Wells Fargo, had reduced the amount it could draw down for working capital after the Laura Ashley share price fell in value in a challenging retail market. Now Wells Fargo and Laura Ashley’s main shareholder MUI Asia are in discussions that could see it draw down enough funding to meet its requirements in the immediate and medium-term future.
Laura Ashley says that if it cannot gain the necessary funding “the company will need to consider all appropriate options”. But it also says that it has a “well-advanced” turnaround strategy, which is showing encouraging early results – in that sales were flat in the first seven weeks of trading. That’s an improvement on the 10.8% fall it has recorded in first-half sales – to £109.6m in the 26 weeks to December 31 2019 from £122.9m a year earlier.
Andrew Khoo, chairman of Laura Ashley, said: “We acknowledge that recent trading conditions, in line with the overall UK retail market, have indeed been challenging. 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 Katharine Poulter will enable the business to execute this broad-based strategy. The major shareholders have indicated their continued confidence in the business and are fully supportive of the management team and execution of the transformation plan.”
Katharine Poulter, currently chief operating officer of Laura Ashley, is to succeed Kwan Cheong Ng as chief executive and chairman on May 1. Poulter’s 25 years of retail experience includes roles at Marks & Spencer, Home Retail Group, Tesco, Kingfisher and Wilko.
Image: Screenshot of Lauraashley.com
