Laura Ashley shares bounce back after lender offers lifeline
Shares in Laura Ashley jumped more than 45 per cent today after the struggling retailer secured access to a £20m lifeline following emergency talks with its lender.
The high street brand said today that discussions between Malaysian owner MUI Asia and Wells Fargo over access to a working capital facility had concluded.
In a statement this afternoon the retailer said: “The group should be able to utilise requisite funds from its working capital facility to meet its immediate funding requirements.”
The agreement does not include a cash injection from MUI Asia, the company added.
The future of the company had been thrown into doubt over access to the asset-backed loan, agreed with Wells Fargo in October, which was tied to Laura Ashley’s stock and customer deposit levels.
After those assets fell, the amount of the £20m facility the retailer could access also dropped, putting its ability to continue to trade at risk.
Laura Ashley – which is due to publish its interim results tomorrow – revealed earlier this week that total group sales fell 10.8 per cent from £122.9m to £109.6m in the 26 weeks to the end of December.
The fashion and homewares brand 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 began to implement a turnaround plan.
Founded in 1958, Laura Ashley enjoyed a heyday in the 1980s, but has been a victim of the gloom shrouding the UK’s retail sector in recent years.
The company reported a full-year loss of almost £10m in the 2018-2019 financial year.