Giving Laura Ashley A Yank
In April, Sir Bernard Ashley went to a North Carolina shopping mall to see a prototype of an expanded Laura Ashley store. As the company's largest shareholder and co-founder, Ashley knows how poorly the $512 million frocks-to-furniture business has fared since his wife Laura died in 1985. But the store, with its new focus on home furnishings, was packed with customers. "I almost cried, it was so marvelous," he says.
Ashley credits a brash American for reviving the hopes of this quintessentially British company. Since becoming CEO of Laura Ashley Holdings PLC last July, Ann Iverson has replaced most of top management, cut the payroll, slashed costs, and unveiled an aggressive expansion plan in the U.S. "I'm the kind of person who has a steamroller behind her back," says Iverson, 52, who was recruited just when shareholders were getting fed up. Now, the market's applauding. On Apr. 18, the company reported pretax income of $15.6 million for 1995, compared with a $46.5 million loss a year before. Since Iverson's appointment, Laura Ashley's stock has more than doubled, to around $2.98.
DOWDY. Yet Iverson is still far from creating a powerhouse. In the vital U.S. market, where many of the company's locations are still undersized and dowdy-looking, same-store sales for the first quarter are down 3% from the same period the year before. And no one knows yet if Iverson can solve the biggest problem: the apparel line, with its signature floral prints and long, girlish dresses, is deeply unfashionable in the minimalist 1990s. Says Kurt Barnard, president of Barnard's Retail Marketing Report: "Laura Ashley really isn't with-it anymore."
Iverson, who favors Prada handbags and Armani suits for herself, acknowledges that the company's Victorian look is dated but cites recent research showing that the brand could appeal to some 19 million women in America and Britain. She hopes the new designer she lured from Carole Little, Basha Cohen, will help freshen the line but still keep the flowing, romantic look.
More important, she's betting that home furnishings will boost sales. The company's wallpaper, bedspreads, linens, and curtains have proven much more resistant to fashion's whims than its frocks have. So, to better display Laura Ashley's wide range, Iverson is expanding the size of the stores. The 670-square-meter prototype in North Carolina, for instance, replaced a 230-square-meter clothing-only store. By decade's end, Iverson wants 65% of revenues to come from home furnishings, up from 50% now.
Iverson is a hands-on manager. Recently, she consulted with handymen on replacing a light in her office, answered her own phone, and even made tea for a visitor. Her tight grip extends to discussions of what kind of wood flooring should be used in the stores. To save expenses, she moved headquarters into a converted London bus depot.
RETAIL MAVEN. Iverson developed her techniques from years of working at troubled companies. In the late 1980s, she hooked up with turnaround artist David Dworkin in a proposed management buyout of Bonwit Teller. The chain was too far gone to save, so she ended up following Dworkin to British Home Stores, a division of Storehouse PLC, the retail empire of designer Sir Terence Conran. Iverson helped boost its profits--and was rewarded with the CEO job at Storehouse's Mothercare Ltd. chain, which sells maternity wear and children's apparel. There, she introduced attractions such as talking trees and singing clocks to lure tots and their moms back into the stores. Once Mothercare became profitable, she briefly joined Melville Corp. in the U.S. to run its Kay-Bee Toy & Hobby Shops.
She also joined Laura Ashley's board, where interim Chairman Hugh Blakeway Webb was searching for a new CEO after the abrupt departure of Jim Maxmin, a former Thorn EMI PLC executive. "Ann was far more knowledgeable about retailing than any other director or even the company's own management," says Richard Wakeling, a Laura Ashley director at the time when Iverson was voted in as CEO.
Iverson's real test comes next year, when the first dresses and fabrics from her design team hit stores. If buyers snap them up, Iverson profits: her pay could reach $5.2 million over three years if she meets performance targets. With the stock moving up fast, investors are betting big she will earn her reward.