Laura Ashley in race to secure rescue deal and stave off collapse
FASHION and home furnishings retailer Laura Ashley is racing to secure a rescue deal by the end of the month to avoid running out of cash.
The company is battling to avoid collapse as it struggles with a slide in high street shopping. A rescue deal would avert potential disaster for 2,700 staff at its 150 shops.
The chain, known for its floral wallpaper and summer dresses, said in a statement issued to The Mail on Sunday last night that it was in talks to agree a £15million loan. But the company warned that the spread of coronavirus could further impact the business if shoppers desert high streets, and said that it ‘continues to monitor the situation closely’.
The chain was established in 1953 by Laura Ashley and her husband Bernard using quintessentially British patterns and designs.
But in recent years, it has struggled to find favour with customers amid growing competition and hard times on the high street.
Retailers have pleaded with Prime Minister Boris Johnson for tax breaks to give the ailing retail sector a lift.
But so far the Government has offered financial assistance only to small firms.
In the Budget last week, Chancellor Rishi Sunak announced a package of measures to support high street shops but only about a third of retailers are believed to be small enough to qualify.
Experts fear a wave of casualties – particularly among those already struggling with large debts – if there is a prolonged fall in shoppers during the coronavirus pandemic.
Laura Ashley said it has drawn up a plan to revive the company’s fortunes but the new strategy is still in its ‘early stages’.
The firm suffered a lacklustre Christmas period but it said last night that sales in the six weeks to March 7 had surged 27.7 per cent compared with the same period a year ago.
Sources said any agreement could still be a fortnight away. Interested parties are understood to include Gordon Brothers, an adviser to retail companies in financial straits. The firm could not be reached for comment.
Sky News separately reported that another potential rescuer Hilco, which owns DIY retailer Homebase, is considering handing Laura Ashley the loan.
Laura Ashley, which is listed on the London Stock Market with more than £200 million sales a year, said a month ago that it had secured a loan from US bank Wells Fargo, understood to be for £20million.
But it said last night ‘the company has continued to review its funding requirements’ and is now ‘in advanced discussions with a third-party lender’. The statement added: ‘There has been a reduction in the amount that the group can draw down under its debt facility.
‘If the group is unable to secure commitment for the requisite level of funding by the end of March, the company will need to consider all appropriate options.’