Fashion and homewares retailer Laura Ashley, known for its pretty florals and patterns, has fallen victim to the challenging UK retail market, in which shoppers are nervous about splashing out on expensive items like furniture.
Weak consumer confidence and ‘difficult’ trading caused UK sales to decline 6.3 per cent to £236million last year, and hurt the firm’s bottom line too.
Underlying profits dropped sharply, down a third at £5.6million for the year. And pre-tax profits, including a hefty writedown on a property sold in Singapore, crashed to a meagre £100,000, compared with £6.3million the year before.
Laura Ashley’s fashion sales are on the up, growing by nearly 10% like-for-like in the year
The full-year plummet is unsurprising given that Laura Ashley issued three profit warnings in twelve months, laying bare its weak sales performance.
Indeed, shares jumped 17 per cent in early trading today – a sign that investors had expected the numbers to be worse.
The retailer, which closed seven net shops last year, and has unveiled plans to shutter another five this year, said it has suffered at the hand of tough trading conditions.
Chairman Khoo Kay Peng said: ‘As set out at the time of the interim results, 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 of the year.
‘This proved to be the case and, given the softer trading environment for the year ended June 30 2018, we are disappointed to report a fall in profits.’
Furniture sales were particularly weak, down 4.1 per cent like-for-like, as cautious shoppers swerved costly outlays for big-ticket items like beds and sofas.
It’s not the only furniture retailer to flag weak consumer confidence over the last year or so. Carpetright, DFS and B&Q all claim to have felt the pinch, while Multiyork and Feather&Black toppled into administration.
Laura Ashley has struggled to shift expensive items like beds and sofas
A bright spot was the group’s online division, which surged 4.1 per cent and now accounts for a quarter of all Laura Ashley’s sales.
Fashion fared well too, with like-for-like sales jumping 9.7 per cent, despite it being an ‘extremely competitive sector’.
Laura Ashley, which owns 160 stores across the UK and has a market value of around £32.8million, is attempting to reduce its exposure to the fast changing retail industry.
It said today it has ambitions to expand its new hotel venture, with plans for more hotels across the UK and internationally after the success of its franchised hotel in the Lake District, The Belsfield.
It will also add to its fledgling tea rooms chain, which currently has just one branch in Solihull.