Laura Ashley owner in talks with banks to keep retail chain afloat
- Credit: Archant
Staff at a Woodbridge fashion retail chain will be among those facing a worrying time as it tries for a cash injection after a big drop in sales nationally.
Laura Ashley - which also has stores in Saffron Walden, Colchester and Beccles - saw sales fall nearly 11% in the last six months of 2019, an update to shareholders revealed.
The business, which was founded in 1953 and became a favourite of Diana, Princess of Wales, is now desperately trying to unlock more money from one of its main lenders after US bank Wells Fargo started to tighten the purse strings.
Its majority shareholder, MUI Asia Limited, is "discussing arrangements" that could allow retailer to draw on more cash from the lender, the company said.
MORE - 'Malt brand is ideally located in Suffolk - but A14 needs an upgrade'The news will spark more questions about the future of the chain, which employs around 2,700 people at stores across the UK.
Shares plummeted by more than 38% on the news, down 1.25p to 2p.
The retailer agreed a £20m loan arrangement with the bank in October last year but loan restrictions meant it would be prevented from drawing it all unless it could meet certain criteria.
"Recent movements in the group's stock and customer deposit levels have led to a reduction in the amount that the group can draw down under its working capital facility with Wells Fargo," the firm said.
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"These arrangements do not involve a cash injection by MUI Asia," the company said.
"We acknowledge that recent trading conditions, in line with the overall UK retail market, have indeed been challenging," said chairman Andrew Khoo, son of MUI Asia's owner.
"There is however a robust plan in place to turn the business around.
"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."