Laura Ashley’s chief financial officer and joint chief operations officer, Sean Anglim, has brushed off concerns over a slump in profits as a “one off” as the business focuses on expanding its move into hospitality.
Anglim said the sale and subsequent charge of a property in Singapore had skewed the brand’s financial results from what would have otherwise been a buoyant performance in “challenging market conditions”.
Statutory pre-tax profit at Laura Ashley dived 98% to £100,000 from £6.3m in 2017, on the back of a £5.5m charge for exceptional items. The sale of the property in Singapore means the group’s fixed assets will decrease by £30.3m, while cash balances will increase by £9.8m and liabilities will decrease by approximately £20m.
An impairment charge of £4.7m was recorded in the group statement of comprehensive income for the year to 30 June 2018. This formed the bulk of the £5.5m bill for exceptional items.
Total like-for-like sales edged down 0.4%, while total group sales fell by 7% to £257.2m.
However, like-for-like fashion sales were up by 9.7% year on year and online sales were up 4.1% to £59.7m.
Anglim was bullish about the performance: “We are very pleased with how fashion has performed, online growth has continued to grow consistently over the last few years.
“It is about product at the end of the day and I think we were spot on in the second half of last year, and we have seen great success almost across the board really [in fashion].”
Over the last nine months Laura Ashley has made a strategic decision to concentrate on selling the Laura Ashley brand as a lifestyle experience through hotels and tea rooms. The firm operates a franchise hotel in Elstree, Hertfordshire and also the Belsfield Hotel in the Lake District.
Anglim said that it had found anecdotal evidence that the hotel offer led to increased interest and sales of its products.
“We saw the potential business case as [hospitality] lends itself naturally to the brand, the consumer reaction to what we have done means it’s something we need to pursue.
“It is capital intensive if you do it all by yourself – we should be as asset light as possible on this venture, and it is easier to get market penetration if you go into a franchise route. [Hotels and tea rooms] will be a showcase for all of our products and, yes, anecdotally it is working.”
Laura Ashley, which has 160 UK stores, is not expected to alter its store estate significantly in the coming year. Anglim said it is “tweaking around the edges”, and two openings and up to five closures are anticipated over the next twelve months.