LAURA Ashley, the fashion chain, has filed for administration, putting up to 2,700 jobs at risk, after rescue talks were halted by the coronavirus outbreak.

The retailer, which has seven stores in Scotland, had been in talks with stakeholders over refinancing, but it said its “revised cash flow forecasts and increased uncertainty” mean it will not be able to secure these funds in sufficient time.

Mui Asia, its largest shareholder, said it was unable to support the retailer with “financial support in the required timeframe”.

Laura Ashley said it hired advisers from PwC to oversee the administration on Tuesday.

The retailer operates 150 stores in the UK and employs around 2,700 staff.

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It was earlier reported that it was in discussions about the £15 million loan with private equity fund Hilco Capital to finance its immediate working capital requirements.

Laura Ashley said it had seen an upturn in sales in recent weeks, with trading up 24 per cent year-on-year for the last seven weeks.

It added though that the Covid-19 virus outbreak has “had an immediate and significant impact on trading, and ongoing developments indicate that this will be a sustained national situation”.

The announcement comes after a challenging period for the clothing and furnishings brand, which saw pre-tax losses balloon to £4 million in 2019.

Sales for the year also plunged by 11% to £109.6 million for the year.

Shares in the company plummeted 68.9% to 0.3p in early trading on Tuesday. It has also asked for its shares to be suspended from trading on the London Stock Exchange.

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The news comes after a difficult time for the high street which has seen Watt Brothers’ flagship store on Glasgow’s Sauchiehall Street close, and Beales department stores and House of Fraser also among those to have hit trouble.

Problems already faced by stores now appear to be being exacerbated by coronavirus, with Laura Ashley citing the disease.

The company said in its statement: “For the seven weeks up to March 13, trading for the Laura Ashley business improved by 24% year-on-year and the directors were encouraged by this strong performance.

“However, the Covid-19 outbreak has had an immediate and significant impact on trading, and ongoing developments indicate that this will be a sustained national situation.

“Discussions with stakeholders have been ongoing and the directors are in advanced discussions for the provision of third-party debt funding. However, based on the company’s revised cashflow forecasts and the increased uncertainty facing the group, the company expects that it will not be in a position to draw down additional funds from third party lenders in a timely manner sufficient to support working capital requirements.

“Mui Asia Limited has confirmed that it is unable to provide financial support in the required timeframe.”

Laura Ashley added: “The directors of the company, its key trading subsidiary - Laura Ashley Limited - Premier Home Logistics Limited, Laura Ashley Investments Limited, and Texplan Manufacturing Limited, have concluded that all available alternative options have been explored and therefore, in order to protect creditors, it is necessary to file a notice of intention to appoint administrators in respect of the company and each of the named subsidiaries.

“Accordingly, the company regrets to announce that the directors of the company, and of the named subsidiaries, have today filed notices of intention to appoint Robert Lewis and Zelf Hussain as administrators.

"If administrators are appointed in respect of the company, given the group’s creditor position, the company is not certain whether there would be any surplus assets available to shareholders of the company.”

Julie Palmer, partner at Begbies Traynor, said: “Laura Ashley is the first high-profile business casualty to fall victim to coronavirus and unlikely to be the last as we start to see the impact of this pandemic on the UK economy.

“As the UK closes its doors, footfall will plummet ever further, emptying stores and causing increasing financial distress.”