Laura Ashley barely breaks even

Fashion and homewares retailer Laura Ashley has revealed it barely broke even after “difficult” trading and hefty writedowns on a property sold in Singapore saw profits crash to just £100,000.

The group, which is famous for its floral print designs, saw annual statutory pre-tax profits tumble from £6.3 million the previous year as retail like-for-like sales slid 0.4%.

However, its under-pressure shares surged 15% as underlying profits came in better than feared, despite dropping a third to £5.6m for the year to June 30, against £8.4m the previous year.

The group said its statutory profits were dragged lower by a £4.7m hit on the sale of the Singapore property, which had originally been bought to become its Asian headquarters under plans to expand into the region.

Chairman Khoo Kay Peng said “difficult trading conditions” seen in the first half had continued into the final six months, with “margin pressure and the impact of a changing retail landscape” also pushing profits lower.

He said trading was set to remain “challenging”, but added the group is “resolutely confident in the underlying strength of this much-loved brand”.

Sales since the year-end have been in line with its expectations, the group said.

UK retail sales dropped 6.3% to £236m over the year to June 30 amid uncertainty in the market and the closure of stores.

Laura Ashley opened one store and shut eight across the UK over the year and revealed plans to close another five in the year ahead, with two new outlets opened.

It currently has six trading stores across Scotland, although it has moved out of Perth and Dundee where it previously had operations.

Sean Anglim, chief financial officer and joint chief operator officer at Laura Ashley, said the group had launched more competitive, cheaper products across its furnishing and decorating ranges in response to the weaker consumer confidence.

“We’re fundamentally happy with the range – there’s not anything wrong with it, but we do need to be a little bit more understanding in terms of price and have more at the competitive end,” he said.

Retail analyst Mark Photiades at Cantor Fitzgerald said it was “another challenging year for Laura Ashley with a further contraction in profits”.

He added: “Whilst disappointing, there are some positive signs emerging, including strong like-for-like growth in fashion.”

Like many established retailers, Laura Ashley has come under significant pressure in recent years.