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Laura Ashley falls further into the red

Losses before tax at Laura Ashley widened by 166% to £4m in the 26 weeks to 31 December 2019, as a result of lower home furnishings sales and Brexit uncertainty. 

The company said disruption caused by the change in its Japanese franchise partner to Itochu Corporation also had an impact. 

Total group sales fell by 10.8% to £109.6m, compared to the same period in 2018. The decline in total revenue was due to the closure of three stores and weaker consumer confidence - with like-for-like retail sales dropping by 10.4%.

The company said margins during the period were affected by sterling’s weakness against the US dollar, as well as an increase in domestic costs. Operating expenses for the period were slightly lower at £43.8m compared to £46.5m in 2018. 

Total UK retail sales for the period were down by 10% to £106.5m and on a like-for-like basis UK retail sales fell by 10.4%. Total ecommerce sales fell 15.5% to £22.2m.

For the period the contributions of group sales by each category were: home accessories 37%, furniture 26%, decorating 16% and fashion 21%. Fashion sales decreased by 2.3% against the same period last year. 

Further to the announcement made on 31 January, the business said Katharine Poulter, current chief operating officer, will be appointed executive director and chief executive with immediate effect.

Poulter succeeds Kwan Cheong Ng, who will retire as CEO of the company. He will remain as executive director until 30 April 2020, after which he will become a non-executive director of the board.

“Over the past year there have been well documented market challenges facing the retail sector”, Andrew Khoo, Laura Ashley chairman, said.

“Similarly at Laura Ashley, we have seen a combination of factors impact our results, ranging from higher costs largely driven by the Brexit uncertainty, minimum wages and business rates increases.

“In the autumn of 2019, we carried out a strategic review of the business to set the future direction of the company and return Laura Ashley to the great British brand that is known and cherished around the world. This review identified six areas of focus: improving our brand and customer strategy, accelerating digital, increasing store productivity, improving products and trading, growth opportunities, and focusing on our organization and culture.

“We have already started to implement the recommendations of the review, and this has started with the appointment of a new leadership team. Katharine Poulter, who brings a wealth of retail expertise, joined us as COO in January 2020 and will take on the role of CEO with immediate effect. Sagar Mavani was appointed CFO in 2019 and brings a fresh perspective and added financial experience during this transitional phase of the business.”

The group operates 153 stores in the UK, comprising 104 mixed product stores, 47 home stores, one concession store, and one clearance outlet. During the reporting period, three stores were closed and one was opened. One store opening is planned for this year.

The company’s hospitality expansion continues with ten licensed Laura Ashley tea rooms and three licensed Laura Ashley hotels. New openings are in the pipeline for 2020. 

Khoo added: “We are focused on developing Laura Ashley as a true lifestyle brand that embraces and reconnects with our traditional values and our strong British heritage.

“We are already making changes to our product range, which will not only be recognisable as iconic, exclusive Laura Ashley designs and prints, but also products that are desirable today and represent timeless quality. We have new and exciting partnerships with brands like Barbour, Rag & Bone and Urban Outfitters and expect to see these developing throughout 2020. We are continuing to champion great British design and craftmanship and are working with local suppliers in a sustainable manner. We remain committed to our roots in Wales and as an employer in the region.

“The group is also exploring new partnership opportunities on the international front which will provide the thrust for our future growth. The Asian market will be a key focal point for the group’s international expansion, while we also explore opportunities in other regions.

”As announced earlier this week, there has been a reduction in the amount that the group can draw down under its debt facility with Wells Fargo, the lender to the group. The company continues to review its working capital needs on an ongoing basis.”

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