Laura Ashley loses another boss

News Analysis: Fresh setback for clothing firm as high street retailers reveal poor festive trading
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LAURA ASHLEY, the fashion and home furnishings retailer, stunned the City yet again yesterday when it announced a poor Christmas trading statement and the departure of its latest chief executive after just five months in the job.

Victoria Egan, who was only appointed to the position in August, is leaving for "personal reasons" and is expected to return to her native Philippines. Mrs Egan is being replaced by Kwan Cheong Ng, a director of MUI, the Malaysian retailer which rescued Laura Ashley with a pounds 40m cash injection last year.

He becomes the fifth chief executive at the group in the last five years and the seventh since 1990. As one analyst put it: "It is quite some achievement. Even football managers last longer than this."

Commenting on the sudden departure of the 55-year-old Ms Egan, Laura Ashley's commercial director Stephen Cox said: "We would have liked her to stay. She is a very nice lady." Ms Egan, who is married to a British businessman based in the Philippines, will remain at the company for a few weeks to oversee the handover.

Her contract stipulated that she would receive an annual salary of pounds 200,000 but she will receive no compensation.

The news of her departure pushed the company's shares down 0.5p to 12p, their lowest ever level. The retailer, best known for its trademark floral dresses, is now valued at just pounds 45m. Though the business is now debt-free and has the support of its bankers, City experts are still questioning its future. "There is no form of management structure there and no consistency. I wouldn't want to hold the shares even at these levels," one said.

Analysts are nervous that the constant upheaval of new management is destabilising the business, which has been rocked by a series of departures. They are concerned that the company does not seem to have decided whether to concentrate mainly on home furnishings or continue with clothing as well.

Laura Ashley claims that the appointment of Mr Ng as chief executive will be a smooth succession and will not mark a shift in strategy, as he was already part of the board that sanctioned a three-part action programme. The first was to stabilise the finances. It is now rationalising its American store portfolio and addressing its supply chain and product problems before the final phase of "growing the business". It is pulling out of manufacturing and has closed two factories with others still on the market.

A few months ago around 100 jobs were cut at the group's head office in West London.

Laura Ashley has also appointed two new non-executive directors. One is Kay Peng Khoo, chairman and chief executive of MUI. The other is Marion "Pat" Robertson, an American television evangelist and philanthropist who founded the Christian Broadcasting Network and the Family Channel, a television station.

The news came with a downbeat Christmas trading statement which showed that in the eight weeks to 16 January like-for-like sales fell by 11 per cent, with clothing sales particularly weak. The company says theweaker sales are partly due to lower levels of discounting, which has improved margins by 3 percentage points.

The group claims discounting levels now stand at pounds 53m, 10 per cent lower than this time last year.

Debts have been eliminated, compared to a pounds 50m deficit this time last year, and full-year losses are expected to be in line with market estimates of around pounds 18m. "We are in much better shape," Mr Cox said.

By the end of January, the group will have reached agreements to close or downsize 19 of its larger US stores. It is in negotiations on a further six.

Yesterday's announcement is the latest in a series of corporate mishaps which have dogged the company over the last few years. The crisis escalated in 1997 when Ann Iverson was ousted from the chief executive position after a disastrous expansion programme. She was replaced by David Hoare, who embarked on a cost-cutting programme but himself lasted less than a year before standing down after the Malaysian buy-out.

John Thornton, managing director of Goldman Sachs International, who has been on the board since 1995, is the chairman of Laura Ashley. MUI now accounts for 40 per cent of Laura Ashley shares while Jusco, a Japanese group controls a further 15 per cent. Sir Bernard Ashley, Laura Ashley's widower, has seen his stake diluted to just under 10 per cent and he no longer has a seat on the board.

Analyst say Laura Ashley should still have a future, though its recovery will be a lengthy process. "It is a shame because the brand still has a value but in what form? It is going to be a long hard, slog."