View from City Road: Laura Ashley needs a heavyweight

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The Independent Online
First David Dworkin baled out of Storehouse early, now Jim Maxmin has been forced out of Laura Ashley. Only John Hoerner remains at Burton Group to show inept UK retailers how things really should be done, US style.

It cannot be said that Dr Maxmin - a name born out of a confusion between his Central European parents and US immigration officials - has made a marked impact on the fortunes of Laura Ashley shareholders in his two-and-a-half-year tenure as chief executive.

Within 12 months of his appointment in September 1991 Laura Ashley shares plunged to levels not seen since the company nearly went bust in 1990. After bouncing sharply, the shares went back into decline and at 81p are more or less where they were when Dr Maxmin first showed up, having underperformed the stores sector by 30 per cent in the meantime.

A wide-ranging group reorganisation, to the accompaniment of pounds 11m of exceptional charges and write-offs, was an auspicious beginning. But Dr Maxmin, with his appetite for high-flown business-school jargon, has continued to disappoint, largely in the US, where serious inadequacies in systems and management have been uncovered with monotonous regularity.

Profits for the year to 31 January, due tomorrow, are expected to show a marginal improvement from pounds 1.8m to pounds 3m, with losses approaching pounds 10m in the US, on sales of around pounds 250m.

A past capital injection from Aeon, Laura Ashley's 15 per cent Japanese shareholder, and a mixture of disposals and good husbandry since, put the company a long way from the receiver's door. But it is still not in a position to pay anything other than a nominal dividend.

Compared with the US fiasco, developments in the UK have been encouraging. Double-digit sales increases were held on a like-for-like basis over Christmas, and a strong brand name has protected the gross margin.

Despite this success, Dr Maxmin's argument for accelerated spending on marketing the Laura Ashley brand - surely correct - has fallen on deaf ears in the boardroom. This, rather than any impending financial horrors, has provided the pretext for his departure.

The boardroom has been bolstered with three solid appointments, to stop it looking like a rudderless ship. But the company badly needs a heavyweight chief executive to extract value from the somewhat threadbare Laura Ashley name, which the stock market is so heavily banking on.