Laura Ashley Secures Bailout Loan

February 21, 2020

Struggling retailer Laura Ashley has secured funding to save its business and continue running day-to-day operations after days of speculation that it could be heading for administration.

The company, which is primarily known for their distinctive home and lifestyle products ranging from furnishings to accessories, have made an initial deal with the American bank Wells Fargo for a preliminary loan of £20m so they can continue trading in their stores across the United Kingdom.

Share Price Recovers

In response to the news that the company had been temporarily reprieved from the possibility of going under, shares in Laura Ashley jumped by 45% and are predicted to remain relatively stable over the next few days.

This comes after shares took a tumble of 11% across the last half of 2019, leaving them in a precarious position at the beginning of 2020 and total group sales across its stores came in at just over £106m, down 10% from the previous year.

Laura Ashley’s majority shareholders– the Malaysian firm MUI- made a statement at the beginning of this week citing that changes in the market and a significant decrease in customer sales were the main depressors of the company’s share price.

Online Pressures

They also stated that Laura Ashley was not the only UK retailer suffering – many analysts have noted that the UK high street is beginning to struggle in its ongoing competition against online retailers and e-commerce giants.

MUI negotiated the deal with Wells Fargo, having been in talks with the bank over the last few days to ensure that Laura Ashley could keep trading.

The group updated traders on the floor of the London Stock Exchange, saying that the loan was not a cash injection for the troubled company, but would allow them to address the most pressing of funding issues that it needed to keep its stores open and shares operating.

Laura Ashley was already in trouble before funds ran out, with many customers beginning to turn away from the company under what has been termed ‘brand confusion’.

In December 2018, Laura Ashley closed 40 stores across the United Kingdom and have struggled to stay relevant in the modern homeware market.