(Bloomberg) -- Laura Ashley Holdings Plc is preparing for insolvency as the coronavirus pandemic erected a new obstacle to the ailing brand's turnaround.
The clothing and furnishings retailer, best known for its floral and paisley designs, intends to appoint administrators, a U.K. procedure similar to Chapter 11 bankruptcy protection, according to a statement on Tuesday. While sales had improved recently, the coronavirus outbreak “had an immediate and significant impact on trading and ongoing developments indicate that this will be a sustained national situation.”
The pandemic is adding to a crumbling environment for British retail as Dixons Carphone Plc said it will close all 531 of its standalone smaller stores in a move that will cost 2,900 people their jobs. Laura Ashley's insolvency threatens the jobs of 2,700 employees.
The iconic clothing maker's position was already precarious before the viral outbreak as it struggled amid falling sales to find cash to fund a turnaround. Laura Ashley said that while funding talks were advanced, its revised cash-flow forecast in the wake of Covid-19 showed that “it will not be in a position to draw down additional funds from third party lenders in a timely manner.”
Founded in 1953 by engineer Bernard Ashley and his wife Laura, the company gained popularity for its designs and quintessentially English appeal. Late film star Audrey Hepburn helped foster the brand, wearing a Laura Ashley scarf in the movie Roman Holiday. Diana, the late Princess of Wales, was also reported to be a fan. Today it has more than 150 U.K.stores.
The London-listed company is controlled by the Malaysian group MUI Asia Ltd. Laura Ashley said that MUI Asia “has confirmed that it is unable to provide financial support in the required time frame.”
To contact the reporter on this story: Deirdre Hipwell in London at dhipwell@bloomberg.net
To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, John Lauerman
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