Laura Ashley sales surge, but it needs urgent funding by end of month
Struggling Laura Ashley was one of few retailers to have good news in its latest trading update on Monday. The company said that the six weeks up to March 7 saw its total sales rising 27.7% year-on-year with gross profit rising 22.2%. Both of those figures were ahead of its expectations.
But it added that while it hasn't yet seen a significant financial impact due to the coronavirus, the company “believes that [the virus] has the potential to negatively influence future trading as a result of reduced footfall and continues to monitor the situation closely”.
It’s a frustrating time for the business as it sees a potential scenario in which its recovery could be derailed, just as it starts to get under way. But there's more at stake than just a period of week trading for the company.
It also said it has continued to review its funding situation and there has been a reduction in the amount it can draw down under its debt facility with its lender. It’s already drawn down £5 million but has determined that it “will need further funding to meet its ongoing working capital requirements”.
The retailer added that it’s continuing to “engage proactively with its key stakeholders, particularly MUI Asia Limited and the trustees of the Laura Ashley retirement benefits scheme”. MUI Asia has "confirmed that it is continuing to actively consider the provision of an additional £10 million facility to further support the company's proposed turnaround plan”.
And it’s in “advanced discussions" with a third-party lender to provide facilities of up to an additional £15 million to meet its working capital requirements.
The debt funding will need to be in place by no later than the end of this month. If it can’t get a commitment for the money it needs, then it said it “will need to consider all appropriate options”.
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