In its latest trading update, struggling retailer Laura Ashley has surprised investors by reporting a significant surge in sales. The period from January 26 to March 7 saw the company achieve a remarkable 27.7% year-on-year increase in total sales and a 22.2% rise in gross profit, surpassing its own expectations. This positive news indicates that the measures put in place by the company to turn its fortunes around are starting to show positive results.

However, despite this encouraging development, Laura Ashley is not immune to the potential financial impact of the coronavirus outbreak. The company recognizes that reduced footfall resulting from the global health crisis could adversely affect its future trading. It is closely monitoring the situation, aware that external factors beyond its control could impede its progress.

Adding to Laura Ashley’s challenges is a funding issue. The company has analyzed its funding situation and discovered a decrease in the amount it can draw down under its debt facility with its lender. While it has already utilized £5 million, it requires further funding to meet its ongoing working capital needs. To address this, Laura Ashley is actively engaging with its key stakeholders, including MUI Asia Limited and the trustees of the Laura Ashley retirement benefits scheme. MUI Asia has expressed interest in providing an additional £10 million facility to support the company’s turnaround plan. Additionally, the company is in advanced discussions with a third-party lender to secure up to £15 million in facilities to meet its working capital requirements. However, time is of the essence, as the debt funding must be finalized by the end of this month. If Laura Ashley fails to secure the necessary funds, it will be left with no choice but to explore all available options.

While Laura Ashley’s impressive sales growth is cause for celebration, it is overshadowed by the looming funding issue and the potential impact of the coronavirus. These current circumstances present significant challenges for the retailer, and its ability to secure the essential funds will be crucial in determining whether it can continue its recovery and sustain its operations.

Links:
1. Laura Ashley Official Website
2. Article on Retail Gazette about Laura Ashley’s Profit Jump and Coronavirus Impact