In response to press speculation regarding its financial performance, Laura Ashley has confirmed that it is trying to secure additional funding.
For the 26 weeks to 31st December 2019, total group sales were down -10.8% (£109.6m), due to "market headwinds and weaker consumer spending" prompting a decline in big-ticket sales. Sales have been flat for the first seven weeks of the new half.
Laura Ashley states that recent movements in its stock and customer deposit levels have led to a reduction in the amount it can draw down under its working capital facility with lender Wells Fargo, which, together with the company's majority shareholder MUI Asia, is exploring the possibility of meeting the group's immediate funding requirements as well as providing ongoing working capital. These plans do not involve a cash injection from MUI Asia. If a solution is not found, Laura Ashley says it will need to consider "all appropriate options".
“We acknowledge that recent trading conditions, in line with the overall UK retail market, have indeed been challenging," says chairman Andrew Khoo. "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 [COO] 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.”
Nigel Frith, a senior market analyst at www.asktraders.com, comments: "A -10.8% slump in sales over the final six months of last year proved too much for Laura Ashley to bear. Slow consumer spending and challenging market conditions have pressurised Laura Ashley to the extent that the company’s owner is now in make-or-break talks over access to emergency funding. Whilst Laura Ashley says it is well advanced in its turnaround strategy, the fact that it is only in the early stages of implementations points to a case of too little, too late. There is a lot of work needed to turn around and reposition a firm which has clearly lost its way."