Laura Ashley, the stalwart of British floral fashions and home furniture retailing, announced yesterday that it was selling the bulk of its remaining European branches to a Dutch company for just €2, the equivalent of £1.39 and barely enough to purchase a Belgian waffle.
The group has agreed the sale of 11 branches across Belgium, the Netherlands and Luxembourg to Laben Holdings, which has signed a renewable four-year franchise agreement with the company.
The move leaves the company with just a handful of stores remaining in Europe, which will all be closed or sold as franchised to complete the group's exit from Europe by the end of the year.
Since January Laura Ashley has closed 33 of its stores across continental Europe after sales of clothing plummeted.
The company is agreeing final terms for the franchise of six stores in Austria, Switzerland and Italy to EDMI, reducing its Continental arm to just six stores in France, four of which are to close by November, with the remaining two also planned to go into franchise.
In a meeting with analysts in May, announcing its preliminary full-year results, the company reported a fall in its European turnover of £2.3m to £16.7m, with like-for-like sales over the previous two months falling by 13 per cent. The company has been particularly hit by the recent economic problems in Germany, where the bulk of its European operation, 20 stores, have been closed this year.
David Cook, chief financial officer for Laura Ashley, said: "A couple of years ago we were talking about Europe as a potential route for expansion - that is still possible, but will be done through franchise partners, who are closer to the action on the ground." The 11 branches being sold had a combined turnover of £6.7m in the year to 25 January, running up pre-tax losses of £2.2m.
The company has also been hit at home by a decline in tourism after the 11 September terrorist attacks in the US.
In its preliminary result, the company reported that its UK business had suffered a 6 per cent fall in fashion sales, despite a 2 per cent increase in overall sales due to its strong home furnishing business.
Overall group turnover for the preliminary full-year figures was up 6.5 per cent, with a loss before tax of £0.2m.