Laura Ashley seeks fresh funding, will 'consider all options' if not secured

Laura Ashley has published a trading update reporting flat sales in the first seven weeks of the year and has said it will “consider all appropriate options” if it is unable to secure the additional funding it is currently seeking.

The British fashion and homeware retailer has confirmed that its majority shareholder MUI Asia Limited is in talks with Wells Fargo to “allow the group to utilise sufficient funds from the Wells Fargo facility to meet the group's immediate funding requirements and to draw down additional amounts to meet ongoing working capital needs for the group in the short to medium term.”

The arrangements would not involve a cash injection by MUI Asia Limited, the retailer said.

“The company welcomes the discussions between MUI Asia Limited and Wells Fargo and is proactively monitoring the situation closely. If the group remains unable to access the requisite level of funding, then the company will need to consider all appropriate options,” the company added.

The retailer continues to face “challenging” trading. For the 26 weeks to 31 December 2019, total group sales were down 10.8 percent to 109.6 million pounds compared to 122.9 million pounds for the same period the previous year. The company said the drop in total revenue was due to the market headwinds and weaker consumer spending during the period, which led to a decline in sales of bigger ticket items.

Laura Ashley 'encouraged by the early signs' of turnaround

However, the company said the development of its turnaround strategy is “well advanced” and, despite its execution remaining at an early stage, said its management team is “encouraged by the early signs.” Sales at the retailer were flat for the first 7 weeks of trading this year.

Laura Ashley expects to announce its interim results for the 6 months ending 31 December 2019 on Thursday 20 February.

Last month, Laura Ashley announced that Kwan Cheong Ng would be stepping down from his role as CEO and executive director of the company after eight years at its helm. He will remain in the position until 30 April, after which he will stay on the company’s board as a non-executive director. Chief operating officer Katharine Poulter has been appointed executive director and will replace Ng as CEO with effect from 1 May.

Andrew Khoo, chairman, said in a statement: “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 the execution of the transformation plan.”

Photo credit: Laura Ashley, Facebook