Retailer Laura Ashley today warned it would slump into the red after dismal January trading left it short of targets for a second time in as many months.
The clothing and home furnishings group said expectations for the financial year to 25 January were now for an underlying loss of around £5m.
In January, Laura Ashley set its hopes on break-even after a poor Christmas trading season meant it would miss market hopes of profits of £6m.
Shares fell by as much as 16% – down 1.25p to 6.5p – following the warning.
The group, best known for its flowery fabrics, blamed the latest disappointment on lower sales and margins in January.
And with more products left at the end of the financial year, Laura Ashley has been forced to take a higher write-down on the value of stock.
In the past it has borne the brunt of poor sales on the Continent although the company has also reported tough trading conditions in the UK.
The group runs 203 stores in the UK and more than 50 on the Continent, although it has begun the process of shaking up its continental portfolio.
It announced proposals in January to exit completely from Germany and reduce its presence in Holland, Belgium and France.
However, the company said today that it was in advanced negotiations with a prospective franchisee willing to take on operations in Germany, as well as Switzerland and Austria.
That could enable Laura Ashley to exit the countries at a much-reduced cost but still allow it to develop franchise operations.
References: EGi News 13/03/03
