Laura Ashley looks to pull itself together financially
The company’s main shareholder MUI Asia, a Malaysian based investment fund, sought new funding for the company but also let it be known that “all options were on the table” if none could be secured.
They were able to raise a £20 million loan from US bank, Wells Fargo and shares immediately saw a 20% uptake to 1.9p on the back of the news.
It’s good news for the 2,700 employees who work in their 155 UK stores although their third largest shareholder, Cavendish Asset Management, sounded a cautionary note.
“It’s good news for the company in the short term but it might not hold up for long.”
They thought the influx of new cash should force the company to refocus on its famous vintage styles and luxury image otherwise “it could be curtains for another well-known high street name.”
Fashion writers have bemoaned the company ignoring its heritage and history so this expected pivot could help them return to public acclaim and profitability. It couldn’t come too soon.
The company’s most recent financial results in August showed a £14 million loss, down from a £100,000 profit only 12 months earlier.
There’s also an interesting point about the funding.
MUI Asia have been at pains to point out that they are not putting any additional money into the business and Laura Ashley have had to put up stock and other assets as security for the loan as there is not enough uncharged security available for a company with a market capital value of £15 million.
This business conundrum is more common than you’d think. Not addressing problems until too late and then having to seek a drastic solution just to maintain current levels of activity.
Chris Horner, Insolvency Director with Business Rescue Expert, has advised hundreds of businesses and offers some sound advice that can apply to any company – whether they are a sole trader selling their creations in a craft market or a household name and listed on the stock exchange.
“The first step to solving any problem is to recognise it for what it is – a problem to be solved.
“Ignoring it and hoping it goes away by itself is a strategy but rarely a sensible or successful one. In most cases the problem, whether it be financial or structural, will actually get worse so by the time we’re asked to get involved, there are fewer options available for the owners than if they’d have got in touch earlier.”
Our team of experienced, expert advisors have seen most common issues and situations that can affect any otherwise well-run business and many more that aren’t so common.
After a free, initial consultation, we will have a better understanding of your unique situation and can work on an effective plan to turn things around.