Laura Ashley has warned that full-year profits will be below market expectations of £9m (€10.1m) due to a combination of flagging sales of furniture and wallpaper and a weaker pound.
The UK retail chain, best known for the distinctive floral prints of its fashion range, reported first-half pretax profits to December 31 fell to £4.3m from £7.8m a year ago. It warned full-year profits would be less than last year’s £8.4m and said there would be no interim dividend.
Seán Anglim, Laura Ashley’s finance director, blamed an “overall toughening of the market” for like-for-like sales declines of 4.4% in furniture and 3.9% in decorating products such as fabrics, curtains and wallpaper. This was partially offset by 4% growth in home accessories including lights, bed linen and rugs and a 1.2% rise in fashion sales. Clothing now represents 17% of the company’s business.
Furniture sales weakening
The decline in the value of sterling since Brexit has impacted on the company, but it has also been hit by the closure of 22 Homebase stores that had Laura Ashley concessions.
The company’s flagging furniture sales are a problem shared by competitors. Bedroom furniture retailer Warren Evans recently went into administration and privately-owned chain Multiyork was partly rescued by DFS after it collapsed last November
Laura Ashley has 161 stores in the UK and has also ventured into hotels and tearooms. The firm is controlled by Malaysia’s MUI Group, which owns 35% of the shares, with a further 25% owned by the chairman, Dr Khoo Kay Peng.
Laura Ashley shares were 0.6 pence lower at 5.5p, a decline of nearly 10%, in mid-morning trade.