Laura Ashley Case

Analysis
Strategic Analysis of
Operations
Strategy
Marketing
HR
Finance
Future

Operational activities of LA
Early operational activities 1953-1985
Sold mainly to department stores such as John Lewis,
Heals and Peter Jones
Opened showroom in London
Production operations transferred to a disused railway
station at Carno, Wales
Opened London retail store in Pelham Street
Expanded companies product range from furnishing
fabrics, clothes, and housewares into wallpaper and
house paints.
The operation strategy being to offer a coordinated
approach to home dcor and clothing with a perfect
matching of designs and colors across fabrics,
wallpapers, paints and ceramic tiles

Contd..Operational activities of
Laura Ashley
International expansion with shops in Geneva,
Paris, Amsterdam & Dusseldorf.
Vertically integrated business
85% of all products manufactured either in
companys own plant or by subcontractors.
Manufacturing in small runs leading to fast,
flexible production of quality fabrics.
1980s: 8 garment making-up plants close to
Carno, 1 fabric plant in Dublin,2 plants in
England.
Distribution from plant and warehouses to retail
stores was done by the companys own
transport division.

Operational issues of Laura Ashley

Company had internal as well as external
expansion which led to a growth in the
companys production capacity by 50%

Problems in operations
massive overproduction of Laura Ashley
catalogs in 1989
delivery of the 1989 autumn range to the retail
stores was 3 months late;
manufacturing costs rose with the appreciation
of the pound sterling;

The Iverson Era

In June 1995, Ann Iverson was
appointed Laura Ashleys chief
executive.
Iverson strategized quickly to
restructure Laura Ashleys
manufacturing, purchasing, and
merchandising.

Operations in Iversion Era

Processes were redesigned

decision-making was centralized
International procedures were standardized
unprofitable businesses were sold
smaller shops were closed
cost control tightened
developed a common catalogue worldwide
Reducing head counts to rectify the
company structure

STRATEGY
ANN IVERSONS STRATEGY

Issues
Focus on overhead costs.
Had no retail focus.
Identified no change to the
business processes
No mention on sales growth and
improving gross margins.
Supply chain inefficiencies.

Strategy In place....
Product Range & Gross Margins
Modernizing garments and expanding home
furnishings

Supply Chain Improvement

Distribution
-Cost cutting by following industrial
standards
Shop portfolio
US market

Marketing- Initial Strategy

1968: Advertisements on London Underground
Positioning: between English bourgeois
tradition and hippie abandon
Evoke nostalgia for the comfort and simplicity
of pre-industrial Britain
1970s: expanded to house paints and
wallpapersInternational Expansion: Geneva,
Paris, Amsterdam
1974: Entered US
Distinctive design of Laura Ashley products
extended to the retail stores

Iversons Strategy
Modernize fashion offers and
garments
Expanded home furnishing ranges
Increase size of shops and strategic
locations
new shops: much larger in format,
positioned in premier locations

David Hoares Strategy

Returned to more normal full price
retailing with occasional marketing
promotions
Redesigned product range
Opened 22 new franchised stores
continue to expand our range of
licensed products.

FINANCE STRATEGY- MUI TO THE RESCUE

In April 1998, the Board agreed to increase the issued equity of
Laura Ashley Holdings and to sell the new equity to the MUI
Group
MUI was a diversified Malaysian group with interests in retailing,
hotels and resorts, food and confectionery, cement and building
materials, real estate, and financial services.
After the equity sale, MUI would own 40% of Laura Ashleys
equity and would appoint four board members. Mrs Victoria
Egan, president of MUIs retail subsidiary in the Philippines, would
become chief executive and Mr Paul Ng Tuand an Tee, executive
director of Metrojaya, would become President of Laura Ashley
North America.
The 43.5 million that the equity sale would raise (net of
expenses) and put Ashley on a sounder financial footing.

What to do?
Extensive restructuring and repositioning
were needed, especially in North America.
The North America recovery program
would require about 20 million (mainly
for store closures) and 6.5 million was
needed to upgrade its logistics and
information systems.
The Board agreed with its banks to
reduce its existing 50 million revolving
credit facility to 35 million pounds by the
end of 1998.

Did it make sense for MUI to continue

to invest in Laura Ashley?
Continuing operating costs, closure of unprofitable store and
refurbishing profitable stores would require large amount of
investments to be made by MUI.
Now MUI must decide whether to invest and try to revive the
sinking business. The reason for re-investing can be to
capitalize on the global standing of the company.
Chances of improving ROA Or else keeping in mind the past
financial records of Laura Ashley, it is unadvisable for MUI to
reinvest in the company.

Did a profitable market exist for

LA products?
Yes. Sales curved upward till 1998.
But declined in the year 1999 in all 3
regions of operations. [Table 2.5]
The company operated in losses for the
past 2 years in US and UK/Ireland but
showed profits in Continental Europe.
[Table 2.5]
The co is also looking into closing
unprofitable stores across US thereby
giving away market share to competitors.

Was this market primarily within

Britain, or did it extend overseas?
UK and Ireland show the highest turnover
and contribution compared to the other
regions. [Table 2.4]
Looking to close shop in US
Therefore yes, markets were primarily
within Britain

How could LA access & develop

this market?
By reducing operational costs
Focus on core business
Revamp the design team. Include
more concurrent themes
Reducing inventory and related costs
Focus on ROE, ROI and ROA

Deteriorating financial performance of

the North American business

HR Strategy
Massive overproduction of Laura Ashley catalogs
in 1989
Losses at the Willis and Geiger subsidiary
Delivery of the 1989 autumn range to the retail
stores was 3 months late
Manufacturing costs rose with the appreciation of
the pound sterling
Rising interest rates boosted borrowing costs
Exceptional charges were incurred from the sale
or closure of non-core businesses, including
Penhaligons, Bryant of Scotland, Sandringham
Leather Goods, and the Units chain of stores
Closure or sale of several production plants

Company level strategies

Ann Iversons

David Hoares

The restructure
program
Phase I. Stabilize the
Business program
Phase II. Improve
the Profitability of
the
Business
Phase III. Grow the
Business

Laura Ashley
Complexity of the
Business
Garment Design
North American

To build a
successful business
on the back of a
strong
international
brand.
Key Problems Facing

3-phase recovery plan for next 5 years

Phase I. Stabilize the Business
stop significant new store development
rebuild the senior management team
generate cash by reducing stocks and selling non-core assets
raise additional finance
Phase II. Improve the Profitability of the Business
return to full price retailing
redesign the product to meet the wishes of our core customers
fix the North American retail business
reduce business complexity and costs
invest in systems
Phase III. Grow the Business
focus on core competence of brand management
build our brand internationally with new products, new
distribution channels and new partners

Future Expectations and

Strategies
Global Market reach
Focus on core businesses and
building more successful brand
products
Efficient and integrated supply and
distribution networks
Restructuring the low performance
regions like NA

Strategies for results

Coordinating with the already established
MUI retail partner distribution channels
Managing proper debt-equity ration
decisions
Franchising or outsourcing the
manufacturing utilities , instead of burning
more capital expenditures
Modifying the existing 3 phase strategies
Market research and real time demand
estimation

Recent developments
Manor hotel @ Hertfordshire- boutique hotel
by laura ashley plc
Focus on online sales and marketing
Android and I phone Apps
Some 8% of Laura Ashleys ecommerce traffic
now comes via its mobile site
Launch of French website in April 2014
German website soon to be launched

Laura Ashley is looking at potential business

through interactive TV- t commerce.