LONDON, United Kingdom — Clothing and furnishing retailer Laura Ashley said on Monday its main banking lender and majority shareholder were in talks regarding the company's immediate funding needs, as it reported a drop in half-year revenue.
The fashion house, a favourite of Princess Diana in its 1980s heyday, is the latest victim of a troubled couple of years for British retailers, its sales hit by store closures, weakness in its home furnishings business and a worsening consumer mood.
The company said on Monday recent movements in its stock and customer deposit levels had led to a reduction in the amount it can draw down under the working capital facility with US bank Wells Fargo & Co.
The lender provided an asset-based loan of £20 million to Laura Ashley last year, using the company's assets as collateral.
The bank and Laura Ashley's majority shareholder MUI Asia Ltd. are discussing arrangements that will let the retailer use funds from the facility for immediate requirements, and to draw down additional amounts to meet ongoing working capital needs in the short to medium term.
The arrangements do not involve a cash injection by MUI Asia Ltd., the company said.
"If the group remains unable to access the requisite level of funding, then the Company will need to consider all appropriate options," it said.
Laura Ashley's total group sales fell 10.8 percent to £109.6 million ($142.89 million) in the six months ended December 31. It said sales were flat for the first seven weeks this year.
Interim results for the 6 months ending December 31 will be published on Thursday.
Chairman Andrew Khoo said that recent trading conditions had been challenging but that there was a robust plan in place to turn the business around.
"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," he said.
"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."
By Tanishaa Nadkar; editors: Aditya Soni and Patrick Graham