Laura Ashley like-for-likes up 7% in first half but profits slip

• Pre-tax profits slip 1.2%
• Like-for-likes rise 7%
• Online sales increase 4.5%, to represent 19% of sales

Laura Ashley reported pre-tax profit slipped 1.2% to £8.4m in the 26 weeks to August 1. Like-for-likes were up 7% but total group sales were down 3% to £139.7m.

Laura Ashley, which operates 198 stores in the UK, closed 10 stores during the period, reducing selling space by 2% to 745,000 sq ft. It opened three new stores during the six months.

Total UK retail sales edged up 0.7% to £125.5m, while ecommerce sales increased 4.5% to £23.5m, and now represent 19% of total UK retail sales, up from 18% last year.

Speaking to Retail Week, chief financial officer and joint chief operating officer Sean Anglim put the hike in sales down to strong furniture sales and a strong seasonal offering, highlighting its summer range of garden accessories had performed well.

On recent trading, the retailer revealed like-for-like sales for the five weeks to September 5 were up 5.7%. Fashion was its worst-performing category during the period, with sales down 5% and like-for-like sales up 0.6%.

Laura Ashley said it will “continue to focus on the core values of the brand which include design, quality and print”. It added that it still expects like-for-like growth of the category to continue this year.

Furniture sales increased 8.8% within the period, with like-for-like sales up 10.4%. Home accessories enjoyed a similarly strong performance, with revenues up 8.2% and like-for-like sales of the category jumping 10.5%. Decorating sales edged up 2.1%, while like-for-likes increased 4%.

Furniture represents 31% of sales, home accessories 29%, decorating 23% and fashion 17%.

International performance

During the period, the retailer’s franchise and licensing sales plummeted 31.5% to £11.7m, which it blamed on the performance of the Japanese market, describing it as “sluggish” as a result of a rise in local sales tax. It also cited the political and economic difficulties of Russia and Ukraine as contributing to a “relatively weak performance”.

Anglim blamed its fall in pre-tax profits on the above tough markets. “Even though the UK was strong, there was a blip in the international franchise business predominantly in Japan, Russia and the Ukraine. In Japan, the economy has been sluggish because of the rise of local VAT over the last 12 months, and also the YEN has been weak, which hasn’t helped.”

Anglim said the weakening ruble, the fall in oil prices and the war has had an impact on its business in the Russia and Ukraine, where it has three and seven stores respectively. The economic woes in the regions meant the retailer would hold off from expanding in those markets for the next couple of years, Anglim added.

Instead, the retailer will focus on entering India and China for the first time in the next two years.

Laura Ashley chairman Tan Sri Dr Khoo Kay Peng said: “We are encouraged as we enter the second half of the year. We will continue to work with our overseas franchisees to ensure that we maximise the international opportunities for our franchise partners and the group.

“Development and improvement of our digital platform, which has been a core group strategy over recent years, will remain a key focus as we strive to deliver a high-quality, multichannel experience for our customers.

“The enduring appeal of our great British brand and the loyalty of our worldwide customers give us confidence and optimism that the growth of recent years should continue.”

The retailer, which opened a hotel in Elstree, Hertfordshire, two years ago, said hotel revenues were up 44%.

During the period, Laura Ashley started offering online delivery to the Benelux regions. It said it expects sales in this region to grow quickly.

Anglim said the retailer has no plans to increase the price of its goods as a result of the introduction of the living wage next year, adding that the retailer would have to “swallow” the additional costs itself. “Like every other retailer in this country, we will have to work harder to make up the difference.”