Laura Ashley has warned that its net pre-tax profit for the full year will fall below market expectations after a difficult first half, during which it faced rising costs.
Like-for-like sales fell 3.5% for the 26 weeks to 31 December, while profit before tax dropped 29% to £7.8m compared to 2016. Total group sales fell 2.5% to £146m.
Seán Anglim, chief financial and chief operating officer of Laura Ashley, told Drapers the reduction in discounting during the period hit its top line, while rising costs dented profits. “We were less active promotionally during the half compared to last year so that hit sales, and the weak pound and national living wage hit profits.”
He added that online and international growth would boost sales in 2017.
Laura Ashley’s online sales edged up to £25.6m during the half, from £25m in the same period last year.
“It was a tough season for fashion, but online was the real driver for fashion sales in the last quarter in particular. Online is currently 20% of total sales and we see that growing. I think aiming for 25% of total sales is conservative. We’re investing heavily over the next year in the website and will be launching a new platform.”
Internationally, the retailer has signed a new licence partner for India and launched its first Chinese website.
“The international expansion is very exciting for us,” said Anglim. “India will expand rapidly in years to come [for us]. I expect stores to open very soon as well as a website. For the time being we’ll just be online in China but we’re considering opening stores. If we do, it will be with a partner.”
In the UK, Laura Ashley is looking at two new locations. Anglim said it expects to tweak its portfolio up and down over the next 12 months.