Laura Ashley has tough first half but fashion ops are on an upswing
Laura Ashley has faced tough times in recent periods so its interim report that was released on Wednesday morning was being closely watched for any signs of improvement.
But not enough improvement was to be found and the company’s shares fell as much as 6.5% in early trading as it warned that its full-year performance will undershoot expectations.
It said that total group sales in the 26 weeks to December 31 dropped to £122.9 million from £134.7 million (although this was largely due to store closures) and total like-for-like retail sales were down 4.2%.
Margins were dented by weak sterling against the US dollar, as well as an increase in domestic costs, and the pre-tax loss was £1.5 million, down from £4.3 million a year earlier.
Was there any good news in the report? Yes there was, especially for the fashion arm of the business. The company had started out decades ago as a fashion specialist but its interiors offer has become much bigger since then. However, the remaining fashion business managed a like-for-like sales increase of 11.8% in the first half.
Total fashion sales for the 26 weeks increased 7.2% and the category’s performance “continues to strengthen. Early reactions to Spring 2019 products are positive and this growth is expected to continue,” the company said.
But that double-digit like-for-like rise wasn't enough to rescue the company from what was clearly a very challenging trading period.
Chairman Andrew Khoo said that “trading conditions have been difficult during the first six months of the year. Given the continued market turbulence and having reviewed the revised management forecast for the second half year, the board now holds the view that the performance for the entire year will fall short of market expectations.”
But he called out the strength of the fashion ops and also said the recent launch of a new digital platform “is expected to improve online sales in the years ahead.”
He added that, in line with its transformation towards being a more lifestyle brand, the group “remains committed to” further develop the hospitality segment of its business. With four tearooms and a licensed hotel already in operation, it has “laid the foundation for the further expansion. A number of opportunities are being evaluated, and we expect to see further openings this year.”
The group has a new licence deal with Itochu for Japan (it was previously with Aeon) and so is upbeat about that country and said it’s also exploring other new partnership opportunities on the international front “which will provide the thrust for our future growth.”
And international is clearly important. In the first half of this financial year, new stores were opened in India and Thailand by its franchise partners. In China, its online business continued to show growth and the Asian market “will be a key focal point for the group's international expansion, while we also explore opportunities in other regions.”
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