Laura Ashley full-year profits drop 9.6% despite strong like-for-likes

The home and fashion retailer reported pre-tax profit slumped 9.6% to £20.7m in the 52 weeks to January 30. Like-for-likes were up 4.8% but total group sales were down 4.6% to £289.5m.

The retailer, which operates 193 stores in the UK, closed fifteen outlets and opened three stores over the period, reducing its store footprint 3.8% to 732,000 sq ft.

Total UK retail sales dipped 2% to £262.1m while online sales continued to grow, up 5.3% to £51.1m, representing 19.5% of Laura Ashley’s total sales.

Speaking to Retail Week, Laura Ashley chief financial officer Seán Anglim said: “Our UK business has seen fantastic growth across all bits of the business – across stores and online and at product level too.”

The retailer’s like-for-likes sales were buoyed by strong sales in the home accessories category, which saw like-for-like sales jump 8.7% and sales rise 5.6%.

Furniture sales increased 2.8% while like-for-likes were up 4.8%.

Fashion continued to be the retailer’s worst performing category as sales fell 4%, although like for like-for-likes increased 2.6%

Anglim said: “We have flatlined on fashion recently but have focused on quality and design and tried to go back to the essence of the brand and I think we have got more product right year on year.”

Decorating revenue dropped 1.1%, while like-for-likes rose 1.3%.

Home accessories represents 31% of sales, furniture 30%, decorating 22% and fashion 17%.

International performance

During the period, Laura Ashley’s franchise and licensing sales tumbled 28.4% to £22.4m, which it attributed to a poor performance in the Japanese market owing to a rise in local sales tax.

In its financial statement, the retailer also referred to “continued political instability and economic difficulties” and its Australian partner going into administration, which led to a one-off charge of £1.3m, contributing to its weak performance overseas.

Anglim said: “A couple of things have affected profit: our Australian partner has gone into administration and so we are working with administrators to see what opportunities arise - we hope to get a new partner down there.”

Despite continued difficulties overseas, the retailer is planning to continue its international expansion. Anglim said: “We do still want to enter the Chinese market and are looking at all of our options at the moment and considering whether we launch with a partner or by ourselves.”

Chairman Tan Sri Dr Khoo Kay Peng said: “We will continue to work with our overseas partners following a challenging year for our international business. The acquisition of our Asian headquarters in Singapore signals our commitment to the overseas business channel.

“Our plans for continued international growth remain central to our strategy as a worldwide brand.”

The retailer’s hotel in Elstree, Hertfordshire continued to grow at pace, with sales up 29% over the period.

Kay Peng said: “We remain optimistic for the future and are confident that the strength of the brand and the enduring appeal of our product ranges mean we are well positioned for continued growth.”