Laura Ashley in legal action after L'Oreal wrangle

Fashion and homewares retailer Laura Ashley is hunting for a new cosmetics partner following an acrimonious end to an arrangement with L'Oreal.

Two Laura Ashley subsidiary companies launched legal proceedings on Monday against the cosmetics giant. They allege L'Oreal failed to develop the true potential of Laura Ashley's perfumery, toiletries and cosmetics products.

A licence agreement was due to run from 1996 to 2016, during which time L'Oreal would pay guaranteed minimum royalties of£17 million.

Laura Ashley wants 'substantial' damages representing at least the minimum value of royalty payments plus damages for breach of contract and overdue royalties of£709,042.

Legal proceedings are likely to drag on until 2004. Laura Ashley chief executive KC Ng said: 'We are searching for a new partner, who must have a true empathy with our brand.'

In a statement, L'Oreal said: 'L'Oreal decided to terminate this licence because of the failure of Laura Ashley to comply with its obligations.'