Laura Ashley has had a tough couple of years, but its decision to return to its famous florals - and cut prices - could see sales flourishing again.
Laura Ashley may look old-fashioned - it was founded by Laura and Bernard Ashley in 1954 - but as its response to last year’s tough trading shows, it can still react like a young company.
It has recorded falling sales in its fashion arm for nearly two years - 5.6% for the year to January 26, 2013 and an even deeper 6.5% for the year to January 25, 2014.
The declines in the fashion division appear to have dented the company’s overall results for this latter period, when it posted a pre-tax profit excluding exceptional items of £19.3m, down 4% on the previous year. Total group sales dropped 1.4% to £294.5m, with like-for-likes down 0.4%.
But this hides what chief financial officer and joint chief operating officer Seán Anglim describes as “a year of two halves”.
In fact, clothing was down 6.9% in the first half, but by the time it reached the fourth quarter it was in 1.5% like-for-like growth - something Anglim believes demonstrates the start of getting the business, which since May 1998 has been majority owned by Malayan United Industries subsidiary MUI Asia, back on track.
Whereas some retailers might wait a handful of seasons to bed in an idea, the team behind the 209-store business took decisive action to turn things around when it became clear that customers were not backing its design direction.
“We put a lot of work into our fashion division, looking at everything from price, colour, print style and fabric composition,” Anglim explains. “We made many amendments and corrections according to what we felt was necessary and hopefully we will begin to see the benefit come through soon.”
Changes have included dropping the price points on certain items - some knitwear pieces, for example, have been cut from £65 to £50 - in some cases with Laura Ashley looking to get a better deal from suppliers.
Indeed, last March it was reported that the business had attempted to squeeze its suppliers on terms, sending out requests for an “immediate cost price reduction of 10%”, including orders that had already been placed. At the time, Laura Ashley said this was due to prices “continually being driven down with increased promotional activity and the advent of online-only retailers”.
But Anglim says it was not all about driving prices down at the supplier end, and that Laura Ashley has, in some instances, taken the hit itself. “This is a partnership,” he tells Drapers. “There are some cases where we can get better cost prices, but this is a long-term game.”
The team also worked hard to address any quality issues with the product -carrying out a huge project analysing its fit across all sizes to ensure the pieces looked right on real women. “We have a much clearer idea of what we did wrong and [what] we need to do to get it right. Hopefully in another six months, we will be saying it worked,” Anglim says.
Nick Kaloyirou, joint chief operating officer with responsibility for fashion, says the key was going back to the customer and listening to what she said she wanted from Laura Ashley. “Someone once asked me ‘What do you think Laura Ashley stands for?’ And I said one thing - flowers. Laura Ashley is all about flowers whether it’s home or fashion, a pair of curtains or a sofa, shoes or perfume,” he says. “It’s just about making sure it’s relevant.”
Looking back to the summer of 2012, it was a different story, with the team telling Drapers it was looking to shake off its “frumpy image”. But now Kaloyirou acknowledges it was “possibly too trend led”.
“There was a slight disconnect [between the product and the customer’s requirements],” Kaloyirou adds. Laura Ashley carried out extensive research into what the customer wanted and, as a result, the same design team has reintroduced occasionwear and officewear.
“It was very complementary in lots of ways - she was saying ‘Why don’t you do more of that’ or ‘We miss you doing this’,” Kaloyirou says. “We need to remember who our core customer is and what they want from us, and that’s the Laura Ashley dress and pretty florals.”
Forgetting this has cost the business in the past 18 months. Fashion now makes up about 18% of total revenues, down from 20% in 2012. Anglim believes it can grow to around 22% - although it is up against strong growth in the homeware division
“There is still scope for growth but it’s more like-for-like growth than overall participation in the business,” he says.
While 2013 was a challenging year for Laura Ashley’s clothing division, in many other respects it was a good 12 months, and one in which the business celebrated its 60th anniversary through the launch of a heritage range of prints and an exhibition commemorating the iconic brand.
Last year also saw the opening of a hotel that showcases Laura Ashley homeware as an innovative way of emphasising the lifestyle nature of the company - and selling its homeware. Although there are no plans to link the hotel - a £150-a-night Tudor manor in Elstree, Hertfordshire - to its fashion arm, the aim is that it will underpin the entire business. Having opened in July, Anglim believes it will add “significantly” to group turnover in its first full year of trading.
And in January this year Laura Ashley sold its 9.57% stake in Moss Bros for nearly £8m - about twice what the company paid for the shares in 2008 - helping to bolster its coffers for any further investment.
Anglim expects much of his focus now to be on international - which has grown 4.2% in the past year and contributes 11% of total turnover - and ecommerce, which makes up 16%.
The latter has been largely driven by click-and-collect, which was launched a year ago “and was adopted [by customers] overnight,” he says.
Laura Ashley is now planning to launch a French-language transactional website in the next couple of weeks and a German- language site will follow a couple of months later.
“It’s always been a very important channel for Laura Ashley over recent years and we have put a lot into it,” Anglim says, highlighting the retailer’s blog - blog.lauraashley.com - and social media platforms as crucial for getting across the culture behind the lifestyle retailer.
The blog underpins Laura Ashley’s renewed focus on its core customer, with lots of content showing how the product is made and emphasising its heritage, but it is also clearly comfortable with the cupcakes and fetes image it sought to ditch two years ago.
“The Laura Ashley woman is fashion-aware, but she wants to wear something that fits comfortably with the way she lives,” says Kaloyirou. “It’s our aim to make sure we offer her the kind of things she wants.”
Top: lace-topped dress with tweed skirt, retailing at £110. Left: printed belted polyester/elastane dress, £80. Main image: floral-print cotton and elastane trousers, £65; cotton floral-print cardigan, £65; viscose/polyester overlaid front appliqué flower top, £40.