Laura Ashley Holdings plc

Laura Ashley Holdings plc

150 Bath Road
Maidenhead
Berkshire SL6 4YS
United Kingdom
(01628) 39151
Fax: (01628) 71122

Public Company
Incorporated: 1954
Employees: 4,697
Sales: £300 million
Stock Exchanges: London
SICs: 6711 Holding Companies; 2331 Women’s and Girls’ Blouses; 2335 Women’s and Girls’ Dresses; 2399 Fabricated Textile Products, Nec; 2649 Converted Paper & Paperboard Products, Nec; 2851 Paints, Varnishes, Lacquers, Enamels, & Allied Products

Laura Ashley Holdings plc is an international designer and retailer of clothing and home furnishings. Invariably described as “quint essentially English,” the Laura Ashley name conjures up images of pretty, romantic women (or rooms) draped in tasteful, gracious dresses (or soft furnishings). Laura Ashley markets a dream of English gentility and elegance, as well as countryside wholesomeness and purity that can be purchased in the urban centers of Britain and around the world. To financial analysts and shareholders, however, the Laura Ashley name conjures up another, less pleasing image: that of a company which seems strangely unable to translate its popularity into profits.

“I trust my feelings implicitly in my work. I look at fabrics and I need to feel they’ve got life and animation—they’ve got to have character to work for me.” Thus Laura Ashley’s eponymous founder described the inspiration for her work. Laura and her husband Bernard started their business in 1953. Working from the kitchen table in their London home, the two used the hand silk screen method to print textiles. Laura designed small items such as linen napkins and tablemats while Bernard’s specialty was furnishing prints. Design inspiration came from many sources, particularly nature and nineteenth-century prints by artists such as William Morris. So favorable was the initial reaction to the Ashleys’ work that within a year they had formed a private limited company and hired more employees. Laura Ashley products were sold in London in the stores John Lewis, Heal’s, and Liberty’s, and almost from the beginning, were shipped to Paris, Amsterdam, the United States, and Australia. Operations continued to grow, and by 1957, when the first Laura Ashley showroom was opened in London’s Burlington Street, domestic and overseas customers numbered about 500.

In 1961 the company introduced its first item of apparel— gardening overalls—and within five years clothing accounted for a significant proportion of Laura Ashley’s revenues. Another, larger, London showroom was opened in 1966, and two years later the first Laura Ashley shop debuted, in Pelham Street, Kensington, London. A year later a second shop opened, in Fulham Road, London, and it became apparent that the company was moving firmly from being a design-based business to becoming a retailer in its own right. From this juncture the company grew very quickly, with profits recycled back into research, design, more factories, and a rapidly increasingly number of Laura Ashley outlets.

Along with domestic expansion came overseas growth: the first foreign shop opened in Geneva in 1972, followed two years later by stores in Paris, Dusseldorf, and San Francisco. Success followed success, and it seemed that the global appeal of Laura Ashley’s pretty floral designs would result in a retail empire. Until 1985.

In that watershed year, with 30 years of steady, solid success to their credit, and every expectation that expansion would continue, Laura and Bernard Ashley decided to float the company on the stock market. Sadly, Laura died in an accident just weeks before the flotation. The validity of the somewhat melodramatic conclusion later reached by the Sunday Times — “with her death, the company lost its essence”—is arguable, but it is certainly true that the new plc was soon engulfed in severe difficulties.

The flotation itself was an undeniable triumph, with shares oversubscribed 34 times. Yet only five years later, in 1990, the company had plummeted sharply into the red and was at serious risk from a takeover bid.

What had gone wrong? Part of the trouble arose from the general economic situation—many British companies suffered in the economic recession of the late 1980s—and part from the prevailing fashions of the times: Laura Ashley’s trademark of graceful, floral, feminine apparel was at odds with the vogue for sharp-suited power dressing.

Probably much more damaging than the recession or contrary fashion trends, however, was what the Independent on Sunday understatedly labeled Laura Ashley’s “rather naive management.” Flushed with success (and plenty of capital) after the flotation, Laura Ashley plunged into enthusiastic expansion. By 1987 the company was operating in thirteen different countries but not operating all that well in most of them. The company’s performance in the North American market was particularly troubled, bedeviled as it was by an unneccesarily complicated, top-heavy structure, excessive overhead and inventory costs, and an inadequate allocation and distribution system that was exacerbated by deficient communications methods.

Laura Ashley’s management team appeared to have little control over a decentralized, haphazard, and inefficient corporate structure. Further, rather than reining back when it began to find itself in financial trouble, the company spent even more; borrowing reached unmanageable proportions, and profits first dwindled, then disappeared. Perhaps the Economist described it best: “For decades Laura Ashley made money by selling a vision of Englishness: flowing, flowery frocks and furnishing fabrics in polite, pastel tones. But it also came to indulge in a very English failing—mismanaging the transition from a successful family business to an international retail chain.” In 1990 Laura Ashley posted a loss of £11.5 million and was saved only by the intervention of the Japanese retailer Aeon, whose welcome infusion of cash, in exchange for a 15 percent stake, bailed the company out.

For thirteen months during this crucial time, to the amazement of financial analysts, the company operated without a chief executive. Finally in 1991 an American manager, Jim Maxmin, was brought to the position. Maxmin, who later stated starkly that the company had been “heinously mismanaged,” embarked on a program of cutbacks, reorganization, and realignment. Believing that Laura Ashley’s real strength lay in its quality as a brand, rather than its status as a retailer, Maxmin sought to concentrate on the company’s strengths—creating popular designs in clothing and furnishing—and extricate it from those activities in which its record was less favorable. To this end, most manufacturing and distribution operations were contracted out. The latter was achieved via an alliance with Federal Express, in a move to reduce expensive inventories and improve stock movement (a perennial problem area for Laura Ashley, which had on one occasion shipped its winter stock to the United States two months late.) Staffing levels were cut and managers were encouraged to take a more hands-on approach to retailing operations. They were required, for instance, to periodically visit shop floors and endure stints on the customer complaints line. Maxmin’s strategies were successful, and Laura Ashley worked its way back to a slight profit in 1992-93 after several years of losses. Recovery continued steadily, though it was slowed by lingering difficulties in the American market.

It came as something as a surprise, then, when it was announced in 1994 that Maxmin was to leave the company after a boardroom “disagreement over investment levels.” No further explanation was forthcoming and no new chief executive was actively sought to replace Maxmin. He left with a compensation package of £1.8 million in a year when the company’s entire profits totaled £3 million.

After Maxmin’s departure, Laura Ashley continued its course of rationalization. Laura Ashley, commented The Times, still retained “an absurdly large infrastructure plagued with overmanning.” Further jobs were cut, particularly in senior management and administration, in which employee numbers were slashed by a quarter. From 1990 to 1995 some 1,500 jobs were eliminated and six factories closed. “Non-core” products were axed from the Laura Ashley line, and renewed efforts were made to reduce overheads. The head offices in North America and Europe were pared down, bringing them under the jurisdiction of the U.K. head office. In the United States, the company closed down some stores and amalgamated others, and the firm began pulling out of Australia completely. The company also focused on improving its information systems to help alleviate the self-confessed “dysfunction and confusion which has inhibited our past development and held back profitability.” Most significantly, Laura Ashley continued to concentrate on its strengths: creative design, a popular brand, a readily identifiable and appreciated image. Laura Ashley undoubtedly serves a niche market but its customers tend to be very loyal. According to the company’s former marketing director, the typical Laura Ashley shopper is “romantic, feminine ... caring, environmentally aware ..., family orientated, cultured, well-travelled and educated.” She is also in the higher socioeconomic brackets and spans all age groups. She is worth wooing, and the company has done so through strategies ranging from special promotional activities such as “tea and Pimm’s” parties in its stores, to a personalized interior design service offering customers home visits by “home stylists.”

Laura Ashley remains an irony of British business. The quality and desirability of the product it sells are not—and never have been—in doubt. Promoted as a “lifestyle” brand, Laura Ashley scores consistently high in terms of customer recognition and appreciation. “Life,” as Laura Ashley’s lyrical annual report notes, “is often an assault on the mind.” Laura Ashley aims to soften the blow for its customers by offering products that are “unselfconsciously graceful and soothing” and evoke “a timeless mood of peace and serenity.” The concept clearly appeals. Somehow, though, while Laura Ashley’s creative philosophy may be globally popular, the company’s bottom line remains strangely depressing: on a 1994 turnover figure of £300 million, Laura Ashley’s profits were a disappointing £3 million. Only time can answer the question posed by the Economist: “Will Laura Ashley always remain a business best known for its potential rather than its profits?”

Principal Subsidiaries: Ashley Shops (Ireland) Ltd.; Laura Ashley B.V. (Netherlands); Laura Ashley Espana S.A. (Spain); Laura Ashley GesmbH (Austria); Laura Ashley GmbH (Germany); Laura Ashley, Inc. (U.S.A.); Laura Ashley Ltd.; Laura Ashley N.V. (Belgium); Laura Ashley S.A. (France); Laura Ashley S.A. (Switzerland); Laura Ashley Shops Ltd. (Canada); Laura Ashley Sri (Italy).

Further Reading

Bain, Sally, “Life Begins at 40 for Laura Ashley,” Marketing, May 13, 1993, pp. 18–21.

“Chief’s Design Out of Style at Laura Ashley,” Sunday Times, April 17, 1994.

Gilchrist, Susan, “Followers Need Faith in Fashion of Laura Ashley,” The Times, February 7, 1995, p. 27.

_____, “Laura Ashley Cuts Jobs,” The Times, February 7, 1995, p. 23.

Hollinger, Peggy, “UK Company News: Minimum Reasons Maximise Puzzle,” Financial Times, April 15, 1994.

“Knifework in the Shrubbery,” Economist, April 16, 1994.

“Laura Ashley,” The Times, February 7, 1995, p. 26.

“Laura Ashley Axe Falls on Managers,” Daily Telegraph, February 7, 1995.

“Laura Ashley Draped in the Colour of Money,” Daily Telegraph, June 8, 1994.

“Laura Ashley Fails to Bloom,” Independent, September 23, 1994.

“Laura Ashley Follows the Same Old Pattern,” Independent on Sunday, April 17, 1994.

Laura Ashley: History, Maidenhead: Laura Ashley Holdings plc, n.d., 5 p.

“Laura Ashley Needs a Heavyweight,” Independent, April 13, 1994.

“Laura Ashley on Course with Pounds 3m,” Daily Telegraph, April 15, 1994.

“The New Pattern for Laura Ashley,” Sunday Express, April 17, 1994.

“Out of Fashion,” The Times, April 15, 1994.

“Shears Snip Away at Cumbersome Laura Ashley,” Guardian, February 7, 1995.

Snowdon, Ros, “Fashion Retailers Dress to Impress,” Marketing Week, February 11, 1994, p. 24.

Stevens, Larry, “A Perfect Fit,” Bobbin, November 1992, pp. 88–91.

“UK Company News: Further Cuts at Laura Ashley,” Financial Times, February 7, 1995.

—Robin DuBlanc