Laura Ashley, a British brand, announced at the end of March 2020 that the company is to cut 268 jobs after initially announcing it would make up to 721 redundancies when the retailer slid into administration. The company failed to secure £15m (approx. $18m) of emergency cash to stay afloat following the coronavirus outbreak.
It will permanently close 70 stores, leaving 721 workers at risk. However, following the recent government announcement of a furlough scheme, Laura Ashley said it plans to furlough 1,669 staff in line with the government’s coronavirus job retention scheme which pays 80% of a worker’s salary up to £2,500 a month, while 677 people will continue to work for the business as normal. The company will continue with its online retail operations in line with social distancing guidance.
The administration came after a challenging period for the clothing and furnishings brand, which saw pre-tax losses balloon to £4m (approx. $5m) in 2019. Laura Ashley has failed to capture its target market in recent years, raising concerns about the company’s position in an over saturated market.
The company has blamed its latest trading troubles on the coronavirus pandemic and the UK lockdown has further exacerbated the pressures already faced by the struggling retailer. Many British retailers including Debenhams and Marks & Spencer have already been under increased strain for the last two to three years because of the uncertainty surrounding Brexit and its effect on consumer confidence.
The rapid spread of the coronavirus has further had a detrimental impact on consumer confidence; according to the latest consumer confidence index from polling firm Gfk, last month there was a record drop in consumer confidence in more than 45 years. UK consumer confidence decreased sharply by 25 points to -34 between the first and last two weeks of March, with people concerned over their personal finances and the economy due to Covid-19.
Laura Ashley needs to re-evaluate its business model and reposition itself in the increasingly competitive market. The company also needs to continue to invest in its online channel in a bid to drive sales and strengthen its brand value. However, the question remains whether this British retailer will be able to survive and re-establish its position following the aftermath of this global pandemic.