Laura Ashley share price dives again in second day of losses
Shares in struggling high street retailer Laura Ashley tumbled today as the brand’s owners continued to scramble to secure emergency funding to keep the firm trading.
The retailer – which is due to publish its interim results on Thursday – suffered a share price drop of 22.96 per cent today, to 1.56p, after plunging more than 40 per cent yesterday.
In a trading update on Monday, the company revealed that total group sales fell 10.8 per cent from £122.9m to £109.6m in the 26 weeks to the end of December.
Laura Ashley blamed the revenue drop on “market headwinds and weaker consumer spending during the period, which led to a decline in sales of bigger ticket items”.
However, it said trading was flat in the first seven weeks of the year as it implements a turnaround plan.
The company is gearing up to publish its full interim results on Thursday, as owners Mui Asia hold emergency talks with lenders over access to a £20m loan.
The firm’s Malaysian owner is in talks with Wells Fargo after a reduction in stock and customer deposit levels led to a restriction on the amount it can draw down from the working capital facility.
“Laura Ashley’s results could be meaningless to investors unless they contain news of fresh funding. Its share price has already been in freefall this week after warning of ‘immediate funding requirements’. The shares could continue in the same direction until there is an answer to the funding,” Daniel Coatsworth, stock market analyst at AJ Bell, said.
“Such warnings shift the focus for the market from the day-to-day operations to asking questions about its ability to survive as a business.”
He added: “If Laura Ashley wants to get back on track, it needs to fix the funding problem hanging over the business, improve its service and make sure customers not only want to buy the products but also do so via any channel they want – which is ultimately the fundamentals of retailing.”
In a statement on Monday it said: “The Company confirms that Wells Fargo and the Company’s majority shareholder MUI Asia Limited, are discussing arrangements that will allow the Group to utilise sufficient funds from the Wells Fargo facility to meet the Group’s immediate funding requirements and to draw down additional amounts to meet ongoing working capital needs for the Group in the short to medium term.”
In August, the retailer announced it slumped to a loss before tax of £14.3m in the year to 30 June after breaking even in 2018.