Clothing and home furnishings retailer Laura Ashley today said a cost-cutting drive had helped shape up the business but warned market conditions remained “extremely tough.”
The group, which is famous for its floral fabrics, said pre-tax losses before exceptionals narrowed to £400,000 in the six months to July 30 compared with losses of £2.3m last time.
It follows a shake-up that has seen it close a number of stores, contributing to significantly lower operating costs.
Laura Ashley is in the process of growing its home furnishings business and reducing its reliance on fashion after suffering a turbulent few years.
However, this drive has so far failed to boost sales and like-for-like sales during the six months were 11.8% lower than last year, including a 35.5% decline in UK fashion sales. Recent group sales were broadly the same.
Chief executive Lillian Tan said: “Although we go into the second half with our business in better shape than before, market conditions in the UK high street remain extremely difficult and our performance will depend upon how consumer confidence progresses in the coming months.”
During this “period of uncertainty”, she said the group would continue to keep an eye on improving its efficiency.
Laura Ashley has 179 stores after closing five home concessions and four mixed-product stores in the period.
At the same time, it opened four new home sites and expects to open another six in the remainder of its financial year.
Around 450 staff have lost their jobs in the past two years, including redundancies at factories in Newtown and Carno in mid-Wales and its London head office.
Analyst Rhys Williams, at stockbroker Seymour Pierce, said the performance was disappointing and the group was saved by further cost cutting and a smaller sales base.
He said: “With market conditions looking weak going forward, Laura Ashley will need to make further cost savings to achieve our forecast.
“However, savings can only last for so long, and sooner or later this business will need to start making some positive like-for-like growth.”
He was continuing to expect pre-tax profits of £4.5m for the full year, against £3.8m last time.
References: EGi News 22/09/05
