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On 17th March 2020, the fashion retailer Laura Ashley Holdings Plc (LON:ALY) stated that it has filed for administration after failing to garner £15 million of emergency cash in a direct consequence of the impact of the novel coronavirus. Due to this development around 2,700 jobs are at the danger of being eliminated. One week earlier, the company stated that it was trying to bring additional money from one of its key moneylenders after Well Fargo bank of the United States started to constrict the supply of funds.
As per the company information, conversations are going on continuously with stakeholders, whereas the directors of the company are in advanced dialogue for raising debt fund from third-party financiers. Nevertheless, based on increased uncertainty and revised cash flow projections, the company anticipates that it would not be able to raise additional third-party funds in time, which could have been enough to finance working capital requirements. Meanwhile, MUI Asia Limited has declared that it will not be able to extend financial support in the desired timeline.
Laura Ashley Holdings Plc, known for its floral designs once worn by the likes of Princess Diana, has blamed the novel coronavirus for this decision because the outbreak has impacted the retail sector very severely. However, the company has faced some difficult times in the past few years to stay profitable. Even the transition to online shopping has not helped the company so far.
As per the company information, the main subsidiary of Laura Ashley Holdings Plc, i.e. Laura Ashley Limited, Laura Ashley Investments Limited, Premier Home Logistics Limited and Texplan Manufacturing Limited along with directors of the company came into conclusion that many of the alternative options have been explored for protecting the interests of the lenders. That is the reason why it is required to appoint administrators with regards to the company and each of its subsidiaries.
It declared that during the seven-week period till 13th March 2020, the companyâs business has improved by 24 per cent on year on year basis. But due to Covid-19 outbreak, the firm has been substantially affected while the developing situation has indicated that this will be a prolonged, nationwide affair.
Overview of Laura Ashley Holding PlcÂ
Laura Ashley Holdings Plc (LON:ALY) is involved in producing and designing products for fashion and household utility. The company provides lighting, decorating, home accessories, curtain & blinds and style-related products to the people. It also provides facilities related to hotels & tea rooms. As at 31st December 2019, the companyâs UK Retail and E-Commerce segment managed 153 stores in the United Kingdom which included 47 Home stores, 1 Concession store, 104 Mixed Product stores, and 1 Clearance outlet. The company is listed on the London Stock Exchange, and its stock is a constituent of the FTSE All-Small index. It trades in ten European countries via its United Kingdom-operated website.
ALY - News Updates
On 27th February 2020, the company announced that Mr Kwan Cheong Ng has retired from the position of Executive Director of Laura Ashley Holdings Plc. However, Mr Kwan Cheong Ng has also resigned from the position of Non-Executive Director with effect from 16th March 2020. He had become Non-Executive Director after stepping down from the position of Executive Director of the company.
On 20th February 2020, the company declared that Katharine Poulter, the current COO of the company has chosen as Chief Executive Officer and Executive Director, effective immediately. She has around 25 years of experience in retail companies, such as Marks and Spencer Plc, Kingfisher Plc, Habitat Limited, Home Retail Group Plc and Wilko Brands Ltd. She joined the company in the year 2020.
ALY â Financial Highlights
On 20th February 2020, the company declared its interim results for the 26 weeks to 31st December 2019.
The company informed that it opened three licensed Laura Ashley hotels and ten licensed Laura Ashley tea rooms during the 26 weeks to 31st December 2019. However, new expansions are in the pipeline for the year 2020.
Due to the weaker confidence of customers and the closing of three stores during the period, like-for-like retail sales declined by 10.4 per cent. However, the total group sales fell by 10.8 per cent to £109.6 million as compared to £122.9 million in H1 2019. Total UK retail sales during the 26 weeks to 31st December 2019 decreased to £106.5 million (H1 2019: £118.8 million). Total e-Commerce sales dropped by 15.5 per cent to £22.2 million (H1 2019: £24.3 million).
Operating expenses decreased marginally to £43.8 million in the H1 FY2020 as compared to £46.5 million in the H1 FY2019. Margins during 26 weeks to 31st December 2019 were impacted due to weaker Sterling as compared to the US Dollar along with a surge in domestic costs.
The company informed that because of reduced Home Furnishings sales as well as due to the revenue interruption caused by the change in Japanese Franchise partner, the loss before tax increased significantly to £4.0 million for the first half-year 2020 as compared to £1.5 million loss before tax in H1 FY2019.
As on 31st December 2019, the net borrowing was reported to be at £1.8 million. The companyâs inventory declined to £43.1 million versus £50.1 million as at 31st December 2018, due to efficient management of stock and consistent with the necessities of the business.
ALY â Share Price Performance
On 17th March 2020, at about 11:14 AM (GMT), the Laura Ashley Holdings Plcâs stock closed at a value of GBX 0.305 per share on the London Stock Exchange. As per the company information, it had requested on 17th March 2020 that its shares be suspended from the premium listing on the London Stock Exchange. However, the stock will be trading again from 23rd March 2020 on the FTSE Fledgling Index and FTSE All-Small Index.
The share price of Laura Ashley Holding Plc recorded at GBX 4.20 as on 02nd January 2020 was its 1-year peak price, whereas the share price recorded at GBX 0.305 as on 17th March 2020 was the 1-year low share price.
The companyâs market capitalisation was reported at GBP 2.22 million with regards to the stockâs last traded market price. The companyâs free float and outstanding shares were reported at 231.81 million and 727.76 million, respectively.
The companyâs beta had been last reported at 2.74, which demonstrates that the movement of the share price was much higher in terms of volatility as compared to the movement in the comparative benchmark index.
