Shares dive at homeware giant Laura Ashley after profit alert

LAURA Ashley shares tumbled more than 18% after the homeware and fashion retailer issued its second profit warning in six months.

The company, which has four stores in Northern Ireland, revealed that its full-year earnings would take a £2.8m hit on the back of a revaluation of one of its freehold properties, compounding challenging market conditions which were already plaguing the retailer.

In a market announcement Laura Ashley said: “The results will show an exceptional £2.8m impairment charge due to the revaluation of a freehold property owned by the Group. In addition, and as previously disclosed, trading conditions have continued to be demanding.

“The board of the company therefore expect net pre-tax profits for the year ended June 30, 2017, will now be materially below market expectations.”

Laura Ashley did not disclose the location of the revaluated property, but as of the end of 2016, its portfolio consisted of 190 stores across the UK, including 25 concessions.

However the retailer said that 22 of its concessions would close by this summer following the Bunnings acquisition of Homebase, but said it was taking steps to “minimise the impact to profit” on the back of those closures.

Laura Ashley last issued a profit warning in February after reporting a 29% plunge in pretax profits to £7.8m for the six months to December 31.

It blamed the disappointing results on poor market conditions. It added that profits were also knocked by rising costs on the back of the weaker pound, as well as the new national living wage, which together contributed to a 6% rise in operating costs to £52.3m.

Retailers have been struggling under the pressure of rising inflation in the wake of the Brexit vote. Market jitters sent the UK currency tumbling in the months following the referendum, helping push inflation to its highest level for nearly four years in May at 2.9%, before easing back to 2.6% in recent months.