LONDON -- The floral prints and bright summer clothes on the racks at Laura Ashley stores offer little hint of the company's grim struggle to stave off insolvency.
The British retailer, which made its name selling English country fashions and furnishings, recently won a crucial reprieve when bankers agreed to let it continue borrowing so long as it sold off its unprofitable chain of U.S. stores.
But while shareholders approved the sale Thursday, enabling Laura Ashley to write off $34.4 million in debt, the retail chain must still try to recover from years of losses and chaotic management, including seven chief executives in 10 years.
Its survival will depend on the company's finding a fashion direction that grabs shoppers the way Laura Ashley clothes did more than a decade ago.
"I think it's difficult to overestimate the scale of the problem here," says Richard Hyman, chairman of the London retail consultancy Verdict Research.
"If someone can come along and turn around Laura Ashley, it will be one of the most incredible turnarounds I'll have seen in my time in the industry," he said.
Laura Ashley found success in the 1970s selling women's clothes, bedding and other home furnishings. But it has suffered a string of reversals, starting with the sudden death of its founder, designer Laura Ashley, in 1985 just before the company issued its first publicly traded shares.
Despite prospering during Britain's retail boom in the late 1980s, the company had trouble adapting to changing tastes.
"The Laura Ashley brand was very specific to a certain era, and things have moved forward tremendously since that time," says Matthew McEachran of broker Investec Henderson Crosthwaite.
After rallying in 1996, Laura Ashley's stock price began a long slide from a peak of 210 pence, or $1.30, to its current level of 13.5 pence, or 21.8 cents.
Laura Ashley began selling in the United States during a wave of aggressive expansion in the 1980s and early 1990s. But its business here has suffered for years, and the company is now selling 106 North American stores to a group supported by Malayan United Industries, the Malaysian firm that last year injected 44 million pounds, or $70 million, into Laura Ashley in exchange for a 40 percent stake.