Almost 2,700 jobs are at risk after fashion brand Laura Ashley announced it has ceased trading amid the coronavirus outbreak.
The 76 year-old brand looks set to become the first UK retailer to collapse due to the COVID-19 outbreak.
Laura Ashley and coronavirus
The company said it continued to monitor the impact of the COVID-19 outbreak and has reviewed its immediate cashflow forecasts.
For the seven weeks up to 13 March, trading for the Laura Ashley business improved by 24% year-on-year, it said; adding that directors were encouraged by this strong performance.
“However, the COVID-19 outbreak has had an immediate and significant impact on trading, and ongoing developments indicate that this will be a sustained national situation”, the brand said in a press statement.
It added that discussions with stakeholders have been ongoing; and its directors are in advanced discussions for the provision of third-party debt funding.
“However, based on the company’s revised cashflow forecasts and the increased uncertainty facing the Group, the Company expects that it will not be in a position to draw down additional funds from third party lenders in a timely manner sufficient to support working capital requirements.”
Lack of financial support
MUI Asia Limited has confirmed that it is unable to provide financial support in the required timeframe.
The directors of the company, its key trading subsidiary (Laura Ashley Limited); Premier Home Logistics Limite; Laura Ashley Investments Limited; and Texplan Manufacturing Limited, have concluded that all available alternative options have been explored.
Therefore, in order to protect creditors, it is necessary to file a notice of intention to appoint administrators in respect of the company and each of the named subsidiaries.
The firm said it has regretfully filed notices of intention to appoint Robert Lewis and Zelf Hussain as administrators.
If administrators are appointed in respect of the company, given the Group’s creditor position, the company is not certain whether there would be any surplus assets available to shareholders of the company.
The Company has requested that its ordinary shares be suspended from premium listing segment of the Official List.
Further announcements will be made in due course.
The company’s shares plummeted more than 60% in London to trade at just 0.35p.