Laura Ashley has suspended trading and filed for administration as the embattled fashion and furnishings firm said that rescue talks were thwarted by the coronavirus outbreak.
The move comes only days after reports that the company, which operates more than 150 British stores and has 2,700 employees, was seeking a £15m emergency loan by the end of the month, without which it was feared the chain would collapse.
On Tuesday, Laura Ashley said: “The Covid-19 outbreak has had an immediate and significant impact on trading, and ongoing developments indicate that this will be a sustained national situation.
“Discussions with stakeholders have been ongoing and the directors are in advanced discussions for the provision of third-party debt funding. However, based on the company’s revised cashflow forecasts and the increased uncertainty facing the group, the company expects that it will not be in a position to draw down additional funds from third-party lenders in a timely manner sufficient to support working capital requirements. MUI Asia Limited [the investment company that controls Laura Ashley] has confirmed that it is unable to provide financial support in the required timeframe.”
The retailer said it intended to appoint Robert Lewis and Zelf Hussain from the accounting firm PwC as administrators to Laura Ashley and its subsidiaries, Premier Home Logistics, Laura Ashley Investments and Texplan Manufacturing.
On Friday, Laura Ashley said it had “not yet seen a significant financial impact due to Covid-19” but warned that the virus had “the potential to negatively influence future trading as a result of reduced footfall”.
The firm had also said then that sales during the six weeks to 7 March 2020 were 27.7% ahead of the equivalent period in 2019 and gross profit was 22.2% up on the equivalent period, which was ahead of management expectations.
Four weeks ago Laura Ashley narrowly avoided collapse after agreeing an emergency deal with its main lender, the US bank Wells Fargo.
It announced new plans to revive the “timeless” designs of its late founder in the latest attempt to breathe new life into the struggling British heritage brand.
Amy Higginbotham, Retail Analyst at GlobalData, a leading data and analytics company, said: “Laura Ashley blames recent poor trading (at least in part) to the Covid-19 outbreak, and though this has no doubt had a significant impact on its 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. Those retailing non-essential purchases that can easily be deferred will be particularly badly hit.”