Laura Ashley profits drop but fashion outperforms
Laura Ashley may have reported lower profits for its latest year in what it stressed was a very challenging market, but its fashion operation was stronger with the company reporting on Wednesday an almost 10% like-for-like sales rise in this area of its business.
Looking at the overall figures for the 52 weeks to June 30, it wasn’t great news. Pre-tax/pre-exceptional items profit fell sharply to £5.6 million from £8.4 million a year ago, while statutory pre-tax profit was down even more, and almost hit lossmaking territory. The company made just £0.1 million on this basis, down from £6.3 million in the prior year. Total group sales dropped from £277 million to £257.2 million and like-for-like retail sales fell 0.4%.
But having painted a none too pretty picture with all of those numbers, the company did have some better news. As mentioned, like-for-like retail sales in its fashion operation rose 9.7%, which is a good performance by anybody's standards in the current climate. Meanwhile, its online revenue rose from £57.3 million pounds to reach £59.7 million and now makes up a healthy 25% of all retail revenue. And those online sales rose 4.1% on a like-for-like basis.
Chairman Tan Sri Dr Khoo Kay Peng said of all this: “The trading environment for the first half of the year was challenging and the board expected these difficult trading conditions to continue into the second half. This proved to be the case and we are disappointed to report a fall in profits. Continued margin pressure and the impact of a changing retail landscape have contributed to the overall reduction in profit before tax.”
But he said the company is encouraged by its progress, especially online, and will be launching a new digital platform in the next few weeks, which should helped to propel that online business higher. And he also called out the fashion performance “in what is an extremely competitive sector.”
The firm’s fashion operation includes its adult clothing, its girlswear, fashion accessories and perfumery, and total sales in this area increased 7.2%. The rise came on the back of a “restructure implemented last year and a much improved product range” with the firm “encouraged by sales in the early weeks of the new financial year.”
But the home accessories category sales fell by 3.6%, although like-for-like sales rose 2.9%, which is good news as it's the company's largest category. It also helped take the sting out of its furniture category performance where total sales fell 8.2% and like-for-like sales dropped 4.1%. It’s the firm’s most highly-priced category and given soft consumer confidence, Laura Ashley wasn’t surprised by the falls. “We are adding a selection of more competitively priced products to this range but will maintain the overall quality and diversity of choice which we now offer,” it said.
Its decorating category also dropped, down 13.9% in total and 7.5% on a like-for-like basis. The company has been working on its offer here in order to try to attract a broad consumer base.
Laura Ashley had plenty of other news beyond these figures with its franchised Hotel and Tea Room concept having “made good progress and its Japan, Hong Kong and Taiwan licensing agreement with Aeon Holdings that ends next month having been partially replaced by a deal with Itochu for Japan. “We expect [this] will help develop the brand presence and contribute significant profitability in the years to come,” it said.
It signed a new license partner in Thailand earlier this year and is looking forward to the opening of its first two Thai stores during the new financial year. And its Chinese digital platforms have continued to grow and are making good progress in developing its presence in China.
It has also accepted an offer to sell its freehold property in Singapore for over £30 million that will help it significantly reduce its debt and strengthen its cash flow.
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