(qlmbusinessnews.com via news.sky.com– Mon, 17th Feb 2020) London, Uk – –
Shares in the retailer fell by more than 40% after it said it was in talks over securing “immediate funding requirements”.
The owner of struggling retailer Laura Ashley is in talks with its lender to secure enough funds to keep trading as it battles “challenging” high street conditions.
Laura Ashley said the discussions between majority shareholder MUI Asia and US bank Wells Fargo came after a tough period in the last six months of 2019 in which sales fell 10.8% to £109.6m.
The discussions are aimed at finding a way for the clothing and homewares retailer to access the cash it needs to meet “immediate funding requirements” as well as capital for the short to medium term.
“If the group remains unable to access the requisite level of funding, then the company will need to consider all appropriate options,” Laura Ashley said.
Shares plunged by 45% on Monday.
The retailer negotiated a £20m loan from Wells Fargo last year but restrictions on how much it can draw on this money have come into force as stock and customer deposit levels have dropped.
It comes after a latter half of 2019 in which the retailer said it was hit by “market headwinds and weak consumer spending” resulting in a decline in sales of big-ticket items.
Laura Ashley said it was in the early stages of a plan to turn around its fortunes, but “encouraged” by the early signs.
Sales for the first seven weeks of 2020 were flat on the same period a year ago.
Chairman Andrew Khoo 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.”
The update comes as the retailer prepares to report half-year financial results on Thursday.
Last August, Laura Ashley reported an annual loss of £14.3m as dwindling demand for its furniture and decorating products dragged sales lower.
By John-Paul Ford Rojas
