Laura Ashley trading is tough, talks to lenders about access to funds
Laura Ashley issued an unexpected trading update on Monday along with a “response to recent press speculation regarding its financial position”. The fashion-to-furniture firm said that trading during the current financial year “has continued to be challenging” and sales were flat in the first seven weeks of 2020.
But that was kind of good news given that, like the rest of the UK retail sector, in the 26 weeks to December 31 (its fiscal first half), total group sales fell as much as 10.8% to £109.6 million. It said “the decline 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”.
It would have been interesting to hear more about that as recent periods have seen the fashion ops performing better than its interiors products and that reference to “big-ticket” items was clearly a reflection of what’s happening in the interiors sector.
But we didn’t get any more information on trading from the firm as it’s releasing its six-month results on Thursday this week.
What we did hear was the news that “recent movements in the group's stock and customer deposit levels have led to a reduction in the amount that the group can draw down under its working capital facility with Wells Fargo,” its lender. But the retail confirmed that its majority shareholder MUI Asia Limited in is in talks on the subject with Wells Fargo.
They’re discussing arrangements to give it access to funding in the short-to-medium term but said the arrangements don’t involve a cash injection by MUI Asia into the group.
But it added that if it “remains unable to access the requisite level of funding, then the company will need to consider all appropriate options”.
It added that the business “is well advanced in developing its turnaround strategy, the execution of which remains at an early stage, but the management team is encouraged by the early signs”.
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 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."
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