Home furnishings and women’s wear designer Laura Ashley (ALY.L) has called in administrators, blaming Covid-19 for its collapse.
Laura Ashley said in a statement on Tuesday it has appointed Robert Lewis and Zelf Hussain as administrators. The pair will try to sell the business as a going concern or break it up to sell the assets if a buyer can’t be found. Laura Ashley warned investors they are unlikely to get any money given the level of debts.
Shares collapsed 90% to trade below a penny on the announcement.
The news puts thousands of jobs at risk. The company has over 150 stores across the UK and over 2,700 staff.
Laura Ashley said sales in the weeks leading up to 13 March rose by 24% but “the Covid-19 outbreak has had an immediate and significant impact on trading.”
“Ongoing developments indicate that this will be a sustained national situation,” management added.
Expected sales numbers were slashed as a result and this left the business short on cash. Laura Ashley had already been facing a funding crisis and was forced to negotiate with bank Wells Fargo for extra funding last month.
“All available alternative options have been explored and therefore, in order to protect creditors, it is necessary to file a notice of intention to appoint administrators,” Laura Ashley said in a statement.
Founded in 1953, Laura Ashley is known for its floral prints and home goods. The company has struggled in recent years as shopping has moved online. Last year Laura Ashley’s sales fell by 3.5% and the company fell to a loss of £9.8m ($12m). Shares had fallen around 90% over the last 5 years.
The spread of novel coronavirus has caused huge economic disruption around the world. Earlier this month regional UK airline Flybe collapsed into administration and blamed coronavirus. Travelex owner, Finablr, on Tuesday also warned it was in danger of going bust.