Laura Ashley falls into administration

Laura Ashley has filed for administration, putting up to 2,700 jobs at risk.

The fashion and lifestyle retailer had reportedly been in talks with Homebase parent company Hillco Capital to secure a £15 million emergency loan, along with an unspecified third-party to fund its immediate working capital requirements.

However, today Laura Ashley stated that its “revised cash flow forecasts and increased uncertainty” meant it would not be able to secure these funds in time.

It also blamed the Coronavirus for having an “immediate and significant impact on trading, and ongoing developments indicate that this will be a sustained national situation”.

Despite this, Laura Ashley said it had seen an upturn in sales in recent weeks, with trading up 24 per cent year-on-year for the seven weeks to 13 March.

The company’s majority shareholder and third party lenders were unable to provide additional support, so PwC has been hired to oversee the administration process.

At the end of February, the business revealed a loss of £4 million in its interim results for 2019, following news that it sought to turn around its finances with a £20 million loan from Wells Fargo.

Amy Higginbotham, retail analyst at GlobalData, pointed out that while the COVID-19 outbreak has no doubt had a significant impact on performance over the past week or so, the retailer has been struggling for a while.

“The brand has long been tired and has struggled to regain relevance in both its fashion and home divisions - financially weak retailers, of which there are many, are likely to follow Laura Ashley into administration given the current crisis."

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