Land of Leather has announced plans to secure a rescue financing deal of £14.8 million, gross of expenses, by way of placing almost 30 million shares, underwritten by its brokers.

In a stock exchange announcement today, Land of Leather said that, without such a fundraising, it would not be able to continue to trade in its present form.

In the six weeks to June 6, like-for-like sales fell 35 per cent. Land of Leather said like-for-likes would be “particularly difficult” for the remainder of the financial year in light of strong comparatives from the previous year.

Land of Leather said profit before tax and exceptional items is forecast to be no less than£2 million for the year ending August 3. On May 25, it added, the retailer had no debt and cash balances of£5.2 million.

Expected cash balances for July, if shareholders vote in favour of the placing at its EGM, will be£14.8 million.

The package should “provide the necessary working capital to trade through the current difficult retail environment”, said Land of Leather. Directors have committed to taking up share equivalent to£3 million.

Land of Leather added that it had received expressions of support from two existing trade insurers. Barclays Bank, the retailer’s credit and debit card clearing bank has agreed to provide its existing clearing facilities to Land of Leather, subject to certain conditions.

Land of Leather chairman Roger Matthews said: “This fundraising package will support our continued trading through the toughest environment for furniture retailing and other big-ticket retailers for many years.”

Shore Capital analyst John Stevenson said: “By participating in this offer, investors are effectively betting that peak trading in six months’ time will stabilise at a like-for-like decline no worse than 15 to 20 per cent.”

He added: “We would not recommend investors take part in the placing, or indeed, participate in the shares at all.”