Laura Ashley shares tumble as it seeks funding to keep trading
Laura Ashley shares tanked on Monday after the struggling retailer said its majority shareholder - MUI - was in talks with lender Wells Fargo about securing funds to allow the company to continue trading.
Laura Ashley Holdings Plc
0.00p
07:45 20/03/24
Responding to a Sunday Times report that Malaysian MUI was scrambling to save the group with an emergency cash injection, Laura Ashley said the two parties were discussing arrangements that will allow it to use sufficient funds from the Wells Fargo facility to meet immediate funding requirements and draw down additional amounts to meet ongoing working capital needs in the short to medium term. Laura Ashley said the arrangements do not involve a cash injection by MUI.
"If the group remains unable to access the requisite level of funding, then the company will need to consider all appropriate options," it said.
The talks come as recent movements in stock and customer deposit levels have led to a reduction in the amount it can draw down under its working capital facility with Wells Fargo.
The retailer also provided a brief update on trading, which it said continues to be "challenging". For the 26 weeks to the end of December, total group sales fell 10.8% to £109.6m due to "market headwinds", which led to a drop in sales of bigger ticket items.
Chairman Andrew Khoo 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 and the board of directors is confident and optimistic that the recent appointment of Katharine Poulter will enable the business to execute this broad-based strategy.
"The major shareholders have indicated their continued confidence in the business and are fully supportive of the management team and execution of the transformation plan."
At 1015 GMT, the shares were down 44% at 1.80p.