BLM PARTNER STUART EVANS ON RETAILER LAURA ASHLEY'S IMMINENT COLLAPSE & WHY BUSINESS OWNERS MUST DIVERSIFY & REPACKAGE TO SURVIVE COVID-19
BLM PARTNER STUART EVANS ON LAURA ASHLEY'S IMMINENT COLLAPSE & WHY BUSINESS OWNERS MUST DIVERSIFY & REPACKAGE TO SURVIVE COVID-19
This is further very sad news from the high street. If I pictured a list of well-liked brands that I have shopped at in my lifetime, Laura Ashley would be yet another one to cross off in what feels like no time at all.
The reports are that Laura Ashley has been struggling for some time, although its last annual report indicated that liquidity was manageable. However, with COVID-19 causing a further reduction in footfall, this proved to be the final blow. The business has not been able to raise sufficient funds to meet its working capital requirements. This won’t be the last business affected by COVID-19, with aeroplanes on the ground, theatres dark and shops and restaurants emptying.
What businesses can do to respond to Covid-19
In terms of what small businesses can do to shore themselves up at this uncertain time, we are looking at an unprecedented situation and there is no magic answer, especially if businesses are operating in sectors like retail, travel or hospitality.
Will help from the Government on Covid-19 improve things?
Help from the Government may be on its way, but it won’t get people out to the shopping centres, into airport lounges or the front row of the cinema. That all said, look critically not only at the predicament of your own business and commitments, such as bank loan repayments and upcoming quarterly VAT payments, but what is happening to your customer base and supply chain. Look out for longer delays in invoices being paid, credit terms being re-negotiated, future orders dropping, news of redundancies or adverse changes.
Diversify and repackage your business
Whilst it’s easy to say, do think about reducing activity in areas of your business where there will be lowered demand and try to see if you can diversify and repackage your business to mitigate the current situation. I got an email last night from a local gastro pub that is normally packed, offering an online takeaway service for a discount. That’s a good example of manageable lateral thinking to try and get through this.
Seek insolvency advice sooner rather than later
Of course, despite all efforts businesses may be overwhelmed. If insolvency is inevitable, don’t bury your head in the sand. Take advice as soon as the distress signals are there; independent professional input can make all the difference. It may result in the closure of your business, but sometimes workable restructuring solutions can be found instead. If the business cannot be saved, it’s still important to wind up its affairs with the benefit of professional advice, to mitigate the risk of personal liability under the Insolvency Act or personal guarantees and also, for directors, disqualification on the ground of unfitness. BLM can help.
Disclaimer: This document does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest to customers of BLM. Specialist legal advice should always be sought in any particular case.