The owner of struggling Laura Ashley is in talks with one of its lenders to secure fresh working capital so the retailer can continue to trade.
Laura Ashley has confirmed that its majority shareholder MUI Asia is discussing arrangements with its lender, Wells Fargo, to meet its “immediate funding requirements” and to ”draw down additional amounts to meet ongoing working capital needs for the group in the short to medium term”.
This will not involve a cash injection from MUI Asia.
The retailer said it welcomed the discussions, but noted: “If the group remains unable to access the requisite level of funding, then the company will need to consider all appropriate options.”
Group sales at Laura Ashley fell by 10.8% for the 26 weeks to 31 December to £109.6m. It blamed a decline in total revenue on “market headwinds” and “weaker consumer spending”, leading to “a decline in sales of bigger ticket items”.
However, in a trading update issued over the weekend, the business stressed that it was “well advanced in developing its turnaround strategy”, and noted that sales were flat for the first seven weeks of this year.
It will announce its interim results for the six months ending 31 December on Thursday.
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.”
Laura Ashley announced in January that its CEO and executive director Kwan Cheong Ng will retire on 30 April. Poulter, who is currently chief operating officer, will succeed Ng in May.