- Shares of Laura Ashley fell more than 41% today after the company said it was in talks with its lender to secure emergency funding
- The talks for funding come as the result of a challenging second half of 2019, in which sales plunged nearly 11%
- The retailer plans to close more than 155 of its stores in the UK
Shares of Laura Ashley plunged over 41% today after the company said it was in talks with its bank about accessing sufficient funds to continue trading.
The fashion and home retailer said the talks between majority shareholder MUI Asia and US bank Wells Fargo came as a result of a challenging second half of 2019 in which sales dropped 10.8% to £109.6m.
The main purpose of the discussions is for the retailer to access the necessary funds to fulfil “immediate funding requirements” and 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.
Weaker sales have caused the company’s share price and consumer deposit levels to plummet, triggering a limit on how much the retailer can draw from the lending facility it has with the US bank Wells Fargo.
The Fulham-based retailer welcomed the funding discussions today, adding it was making a statement in “response to press speculation”.
“We acknowledge that recent trading conditions, in line with the overall UK retail market, have indeed been challenging,” said CEO Andrew Khoo.
“There is however a robust plan in place to turn the business around.”
The pressures on Laura Ashley have gotten worse after a drop in stock levels that took place after Christmas, reducing the company’s ability to provide assets in exchange for secured loans. Laura Ashley plans to close over 155 stores in the UK.
Business expert Kate Hardcastle said Laura Ashley is getting beaten by competition in both the fashion and furniture sectors.
“I should be their target consumer at 43, with three children and my own house to decorate, but they wouldn’t even be in my mindset. There are a lot of entrants in that marketplace, so lots of competition and good pricing, while Laura Ashley is very rarely surprising,” she said.
The retailer’s sales for the first seven weeks of 2020 were relatively flat compared to the same period a year ago.
Shares of Laura Ashley have shrunk 90% over the past five years.