FURNITURE retailer Land of Leather has called in KPMG, the accountant, to advise on the renegotiation of bank facilities before its year-end in July.

The struggling sofa chain is under pressure from a sharp downturn in trading and increased costs. The company said it had £16.3m of cash balances in March but as trading deteriorated was under pressure to come to a new arrangement with its bank. It has a revolving credit facility of £5m (reduced from £7m last year) a £1m overdraft facility and it owes £53m to suppliers and other creditors.

There was hope the bank holiday weekend would help put the company’s finances in better shape, but bad weather combined with low consumer confidence made for a disappointing performance.

Last weekend’s rain was the latest blow to the retailer’s share price. It closed at 20p on Friday, having declined from a high of 355p at the start of 2007, and from 124p at the beginning of this year. A profit warning in January led to a halving of the share price, which has fallen steadily since.

At the end of March Land of Leather’s interim pretax profits fell from £8.4m to £5.5m and it cut its dividend. House broker Investec recently slashed its proft forecast by £1m to £4.5m.

The company took another blow in April when it emerged that Sleep Depot, a bed retailer with over 70 concessions within Land of Leather shops, had gone into administration. The loss of Sleep Depot rent will cost the chain £1.6m this year.

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