Laura Ashley: No Longer Resting on Its Florals

LAURA ASHLEY, known for its floral fabrics and flouncy frocks, has donned a new management style after three years in the red and a close brush with bankruptcy.

Jim Maxmin, who came on board as chief executive officer in September 1991, is hauling the English retailer's management into the '90s.

He is refocusing the company on its Welsh design heritage after it bought a number of other small companies and took its eyes off the clothing and household-furnishings business.

Dr. Maxmin is confident that the appeal of the Laura Ashley brand - country-cottage romanticism - is as great as ever. The 5 to 8 percent of women who make up the retailer's core customers are the same the world over, according to the company's market surveys - well-to-do, well-educated, cosmopolitan, environmentally conscious, and capti- vated by things English.

But because the key to the business is building a relationship with those people who love and share the lifestyle captured by Laura Ashley, Maxmin says, the company needs to get back to basics and serve the customer.

The challenge for Maxmin, an outsider in the 39-year old family business, was to turn around what he terms a "dysfunctional" management and reverse a 20-percent slump in sales. The company, he says, was divided into little empires, each with its own complex hierarchy and accounting and computing systems.

"It was really no longer Laura Ashley - it was six or seven strategic business units," Maxmin says. "Everyone had their own stock [inventory], which drove up the borrowing and that's what almost bankrupted them."

Added to this, the North American headquarters in Mahwah, N.J. employed 354 people to supervise 160 shops.

"So here you have this niche [market] and you have a company that's fragmented out of existence," Maxmin says.

But the CEO, who regularly flies between London and Laura Ashley's new North American headquarters in Boston, is restructuring with some success.

He knocked out the top 116 managers, cut the top off each business unit, globalized and integrated operations, and gave sales people the authority to innovate and serve the customer as they saw fit. The Boston headquarters' staff was trimmed to a lean 100.

And although sales are still flat, profitability is up compared with the same period last year.

Maxmin started a new scheme in the company's factories called "That's Dumb." "You write to your coordinator saying this is a dumb idea and the manager has to write back within 24 hours saying why he actually does something this dumb," he explains. Part of his effort to empower employees, the scheme is being launched in Laura Ashley worldwide next February.

"It's making them [the employees] understand that, first, you can do something; second, that we'll listen; third, that cost savings should be fun," he says.

That strategy proved itself dramatically when the staff of 15 loss-making stores in Britain were invited to run the shops as they saw best.

Maxmin offered staff a 10 percent cut of any savings. Eight stores shot to the top, with the staff at London's Marble Arch shop sharing a 42,000 British pounds (US$64,000) commission for increasing profits.

Maxmin bubbles with enthusiasm: "They held Midnight Madness parties. They had all their boyfriends dress up in DJs and they put on a bridal evening.... They announced sales. They learned that if you change the shop's wallpaper, you actually sell it. Some were changing wallpaper every three or four days.

"They changed the labor matrixes so they only came to work when they actually had the business," he says. "They did the things that any sensible person would do and it was fantastic."

The approach is being extended to Laura Ashley shops everywhere.

Another element in Maxmin's plan was to simplify distribution. Federal Express has enabled the company to centralize stock in Wales, close 7 out of 9 warehouses, and ship orders anywhere in the world within 48 hours.

But fundamental to a revitalized Laura Ashley is the focus on the end user. Maxmin says the company had lost sight of its customer, who, among other things had grown fuller-figured and more work-oriented over the last 40 years. New lines of career wear and separates are on the racks and in larger sizes.