Only yesterday, Laura Ashley was still seeking an emergency cash injection to keep it going and talking about a sales improvement. But as of today, the company is filing for administration. This means some 2,700 jobs are at risk.
While its move to appoint administrators comes as no surprise in general, it's perhaps more of a surprise given that on Monday it had said trading in the six weeks up to March 7 had risen in high-double-digits. It said on Tuesday that “the directors were encouraged by this strong performance. However, 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”.
The news comes on the same day that Dixons Carphone said it would close all of its standalone Carphone Warehouse stores, jeopardizing another 2,900 jobs.
While Carphone’s situation wasn’t specifically linked to the coronavirus, Laura Ashley blamed the outbreak directly and it's likely to be an issue for many under-performing chains. The current pandemic means struggling retailers have no hope of recovering in the few months ahead as store footfall and general shopping plummets.
Laura Ashley had needed £15 million of emergency funding to keep going but is now working with advisors at PwC. This comes after its majority owner, MUI Asia, had been unwilling to come up with the extra money it needed and it had been unable to secure a loan from anywhere else. It appears that both the owners and possible lenders lost confidence in its turnaround ability in the current retail environment.
But this isn't to say that Laura Ashley will disappear from the high street. The company, which is listed on the London Stock Exchange, will no longer be listed. But it could be bought, perhaps by another retailer or a private equity buyer that thinks it can turn it around.