Laura Ashley goes into administration amid coronavirus outbreak putting 2,700 jobs at risk

Covid-19 ‘had an immediate and significant impact on trading’ says struggling fashion and homeware retailer

Laura Ashley has struggled to secure extra funding (AP)

Laura Ashley has gone into administration after rescue talks with its lenders were derailed by the coronavirus outbreak.

The fashion and homeware chain, which employs 2,700 people, has been struggling to secure extra funding to stay afloat after US bank Wells Fargo threatened to pull the plug last month.

The virus has had “an immediate and significant impact on trading, and ongoing developments indicate that this will be a sustained national situation”, Laura Ashley said.

Laura Ashley’s Malaysian owner entered talks with Wells Fargo last month to seek a funding lifeline that would allow the struggling retailer to continue trading.

MUI Asia, which owns the majority of Laura Ashley’s shares, had said it was “discussing arrangements” with the bank.

Laura Ashley said sales had jumped 24 per cent in recent weeks but “revised cash flow forecasts and increased uncertainty” due to the Covid-19 pandemic meant it will not be able to secure the funds it needs in time.

Many retailers had already been in difficulty before the government announced draconian social distancing measures on Monday in a bid to slow the spread of coronavirus.

Boris Johnson advised people against visiting pubs, bars, restaurants and similar venues and to avoid “non-essential” social contact.

The hospitality industry warned of hundreds of thousands of job losses unless the government steps in with financial support to make up for plummeting trade.

Moments after Laura Ashley said it was calling in the administrators, cinema chains announced they would close screens across the UK.

Companies including Cineworld, Odeon and Picturehouse said all screenings from Wednesday 18 March would be cancelled until further notice.

The turmoil engulfing thousands of British businesses underlines the scale of the task facing chancellor Rishi Sunak when he unveils plans later today to prop up the economy.

French president Emmanuel Macron announced the government would back €300bn of loans to businesses.

On Sunday, the Danish government offered to pay 75 per cent of employees’ salaries for firms that would otherwise make redundancies because of the coronavirus.

For three months the state will pay wages up to a maximum of 23,000 Danish crowns (£2,805) per month.

“If there’s a big drop in activity, and production is halted, we understand the need to send home employees. But we ask you: don’t fire them,” prime minister Mette Frederiksen said.