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Laura Ashley profits dive in ‘challenging year’

Laura Ashley’s profit before tax and exceptional items fell 33% for the year to 30 June to £5.6m, amid “challenging” trading conditions.

Statutory pre-tax profit at the British lifestyle brand dived 98% to £100,000 compared with 2016/17.

Total like-for-like sales edged down 0.4%, while total group sales fell by 7% to £257.2m.

Like-for-like fashion sales were up by 9.7% year on year.

Online sales were up 4.1% to £59.7m and now make up 25% of total revenue.

The business, which is controlled by Malaysia’s MUI Group, has entered into a conditional agreement to sell a commercial property in Singapore  for S$54.5m (£30.3m). The property was originally bought with a view to having an Asian headquarters.

International sales currently make up around 7% of total sales for the business.

Laura Ashley has 160 UK stores.

Chairman Tan Sri Dr Khoo Kay Peng said: “As set out at the time of the interim results, the trading environment for the firstst half of the year was challenging and the board expected these difficult trading conditions to continue into the second half of the year. This proved to be the case and, given the softer trading environment for the year to 30 June 2018, we are disappointed to report a fall in profits. Continued margin pressure and the impact of a changing retail landscape have contributed to the overall reduction in profit before tax.

“We are, however, encouraged by the progress and continued growth being made by our online business and will be launching a new digital platform in the weeks to come. 

“Having decided earlier this year to franchise the Hotel [Laura Ashley runs The Manor Hotel Elstree, Hertfordshire, and The Belsfield Hotel Lake District, Windermere] and Tea Room concept [offering British afternoon tea in other hotels] both domestically and internationally, we have made good progress and are optimistic about the possibilities for growth. This will give the group brand enhancement and profitability going forward.

“Our licensing agreement with Aeon Holdings for the territories of Japan, Hong Kong and Taiwan will come to an end in September 2018. We are, however, delighted to announce that we have signed a master licence agreement with Itochu Corporation for Japan, which we expect will help develop the brand presence and contribute significant profitability in the years to come.

“We signed a new licence partner in Thailand earlier this year and we are looking forward to the opening of our first two Thai stores during the new financial year. Our Chinese digital platforms have continued to grow and are making good progress in developing our presence in the territory.

“As announced separately today, we have accepted an offer, conditional on shareholder approval, to sell the freehold property in Singapore. Although the proposed sale has led to an impairment charge for the group, on completion of the disposal, group net debt will be significantly reduced and cashflow will be strengthened.

“Laura Ashley’s brand is built on beautifully designed, high-quality products. While the trading environment will continue to be challenging, we remain resolutely confident in the underlying strength of this much-loved brand.”

 

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