Laura Ashley to ‘consider options’ in scramble to secure funds

The embattled fashion and homewares chain has admitted that its majority shareholder, MUI Asia, is in discussions with Wells Fargo about its finances as it races to secure its future.

Laura Ashley said talks are ongoing over a deal that would “allow the group to utilise sufficient funds from the Wells Fargo facility to meet the group’s immediate funding requirements”.

It added that the potential deal would also provide it with headroom to “meet ongoing working capital needs for the group in the short to medium term”.

However, Laura Ashley did not provide any certainty that a deal would be struck with Wells Fargo and said it was “monitoring the situation closely”.

The retailer admitted that, if an agreement could not be reached, it “will need to consider all appropriate options”.

It comes as Laura Ashley grapples to shore up its balance sheet amid a period of turbulent trading.

In an unexpected update issued this morning, the retailer cautioned that trading has “continued to be challenging”.

In the first half of its current financial year, covering the 26 weeks to December 31, 2019, group sales fell 10.8% to £109.6m.

Laura Ashley said the decline was a result of “market headwinds” and “weaker consumer spending”, which sparked a decline in sales of big-ticket items.

However, the retailer insisted it was “well advanced in developing its turnaround strategy” and said it was “encouraged by the early signs” of its strategy. In the first seven weeks of 2020, sales have been flat year on year.

Laura Ashley revealed in January that a new chief executive would be driving that strategy forward. Current boss Kwan Cheong Ng is stepping down on April 30, to be replaced at the helm by current chief operating officer Katharine Poulter.

Chair 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 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 execution of the transformation plan.”