Laura Ashley shares sink as director quits

Laura Ashley, the troubled women's fashion retailer, faced a fresh crisis yesterday when yet another director quit and the shares sank close to their all-time low. The departure of Basha Cohen, the design and buying director, who is leaving for a similar post at Tommy Hilfiger, the US fashion group, means three Laura Ashley directors have resigned in the past two months. The company, which is famed for its floral frocks and chintzy home furnishings, now has no buying director, merchandise director or UK head of finance.

Laura Ashley shares fell 6p to 50p, a penny off their lowest point since it became a public company in 1985. They stood at 219p last September. There was a growing feeling in the City yesterday that the business would have to issue a trading statement following the end of its half year this week and the position of Ann Iverson, the company's pounds 1m-a-year chief executive, could be called into question.

One analyst said: "She's well paid for her efforts. It's up to her to deliver." Nick Bubb, analyst at Societe Generale Strauss Turnbull, said: "Losing Basha Cohen is a big blow. She was Ann Iverson's right-hand woman. It's another big set-back."

One insider said: "What she [Ann Iverson] is doing is blaming everyone else. Laura Ashley is a complex business and what it needs is investment over the long term, not a short-term hit."

There is even talk of a possible takeover. As more than half the shares are owned by Sir Bernard Ashley, Laura Ashley's widower, and the Japanese group, Jusco, a hostile deal is unlikely. However, it is possible that the group could be taken private. Mr Bubb said: "The timescale of recovery must now be too long for most institutional appetites."

He said the recruitment of Ann Boyd, creative director at Ralph Lauren in Europe for 10 years, was welcome, though she was only a non-executive.

Laura Ashley has been plagued by poor trading and overstocking this year as rumours of boardroom rifts have spread. In April the company issued a warning saying full-year profits would be well below the pounds 21m expected. Ms Iverson admitted she had been over-optimistic on sales forecasts which left her with too much stock. There are rumours that the overstocking levels are as high as pounds 25m-pounds 30m.

In May the merchandise director, Julie Ramshaw, resigned to return to the City as an analyst. Dominic Lavelle, the finance director for the UK and Europe, quit at the same time to take up a similar position at rival fashion store Oasis. Earlier this month the company's own broker, Dresdner Kleinwort Benson, slashed its profits forecast from pounds 17m to pounds 8m.

For Ms Iverson, the past year has seen an incredible reversal of fortune. When she was appointed chief executive in June 1995 she was hailed as a retail saviour.

She was highly regarded for her work at BhS and Mothercare in the early 1990s and Laura Ashley shares soared beyond any sustainable level.

A hard-driving executive, the four-times-divorced Ms Iverson has a reputation for a hands-on management style. Some analysts say this may have been seen as interference and meddling by her boardroom colleagues and may have contributed to the long list of departures.

Richard Hyman, of retail consultants Verdict Research, said: "The share price went up to absurd levels when she came in with this `wonder woman' tag. Now she is seen as hopeless. Neither of these is true but some things have gone wrong."

Mr Hyman said the over-ordering of stock was "an unforced error" and the company's management had not been working well together. On Ms Iverson he said: "She may well go back to America. But if she goes now she will have a huge blot on her copybook."