Laura Ashley ‘on the brink’: Shares slump by 38 per cent as owners seek bailout

Struggling high street chain Laura Ashley is battling to stay afloat – putting more than 2,700 jobs at risk.

Shares in the fashion and homewares brand fell by 38 per cent yesterday as its Malaysian owners confirmed it was seeking an emergency injection of funds.

Investment firm MUI Asia, the stores’ main shareholder, is trying to secure a £20million lifeline from US bank Wells Fargo to allow it to keep trading.

If it does not get the funds, it said it would have to ‘consider all appropriate options’ – including going into administration.

Founded in 1953 by Welsh fashion designer Laura Ashley and her husband Bernard, the chain became a middle-class favourite in the 1970s and 1980s with its floral prints, and Princess Diana was among a legion of well-heeled fans.

But it has since struggled to attract younger buyers, with a slump in demand for its chintz furniture in particular leading to multi-million-pound losses in recent years.

After a mini-revival in the late 1990s under new owners MUI – backed by Malaysian tycoon Khoo Kay Peng – Laura Ashley has battled to compete with more modern, cheaper rivals such as Zara.

The chain’s troubles echo a wider malaise on the high street, which is struggling against online rivals, rising rents and business rates [File photo]

It made the decision in December 2018 to close 40 stores across the UK and, in August last year, it announced a half-year loss of £14million. 

In a statement issued to the stock market yesterday MUI said trading continued to be ‘challenging’, with sales falling by nearly 11 per cent in the second half of the year.

Laura Ashley had secured the £20million loan facility with Wells Fargo in October, but falls in its share price has cut the amount the firm can access.

Reports over the weekend that the company’s future was in doubt prompted yesterday’s statement.

But it has since struggled to attract younger buyers, with a slump in demand for its chintz furniture in particular leading to multi-million-pound losses in recent years

Mr Peng’s son Andrew Khoo, who took over from his father as chairman of Laura Ashley in 2018, 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.’

Part of this plan involves closing more of its 155 UK stores.

Retail expert Kate Hardcastle said Laura Ashley has ‘lost its way’, adding: ‘That chintzy British look was quite interesting to the Asian market but Laura Ashley has not really found its way back into the hearts and minds of consumers.’

Struggling high street chain Laura Ashley is battling to stay afloat – putting more than 2,700 jobs at risk [File photo]

The chain’s troubles echo a wider malaise on the high street, which is struggling against online rivals, rising rents and business rates.

Last year Mothercare, Debenhams and Bonmarche joined a growing list of household names which have gone into administration or dramatically cut back operations.

Yesterday Shoe Zone became the latest retailer to warn of store closures unless business rates are slashed.

The budget footwear chain urged the Government to overhaul the levy, as it revealed rates across its 500 stores have risen by more than a half in a decade.

It said failure to take action could result in the closure of around a fifth of its outlets.

Chief executive Anthony Smith said: ‘If people want vibrant high streets, they really need do need retailers like us to keep our shops open in smaller towns.’

Business rates are based on the rental value of commercial properties such as shops or offices but disproportionately hit high street locations.

Boris Johnson has promised a ‘fundamental review’ of the tax, with new Chancellor Rishi Sunak expected to announce more details in the Budget.

After a mini-revival in the late 1990s under new owners MUI – backed by Malaysian tycoon Khoo Kay Peng – Laura Ashley has battled to compete with more modern, cheaper rivals such as Zara