Laura Ashley: Turnover And Profit Collapse

Laura Ashley, UK retailer of home accessories, furniture and apparel, issued a profit warning earlier this month and announced that their 2016 full year results, which ended June 30, 2017, would be “below market expectations”.

On Wednesday then the full extent became known. Nevertheless, there is hope for the future of the company. Laura Ashley has confirmed that they will continue to commit to the fashion business, although this category, which was used to found the company, now accounts for only 15 percent of total sales.

The payment
So let’s take a close look at the 2016 figures. Earnings before tax dropped to 8.4 million pounds from 24.7 million pounds the previous year. But remember, last year’s period consisted of 74 weeks.

Given that the most recent financial year was 42 percent shorter, profits ‘only’ fell by around two-thirds. The profit fell to 6.3 million pounds from 22.8 million pounds in 2015.

What’s striking is that sales were not as strong. Thus, the company keeps well on the sales front, but can make no profit. In fact, sales in the 52 weeks were £ 277 million, compared to £ 400.9 million in the 74 weeks before. If one compares now the values, the sales sank just by 3.1 per cent.

But there was also good news. Online sales were £ 57.3 million, up from £ 73.5 million a year earlier. This even increased sales by 5.6 percent. This is not the double-digit increase that many brands are currently reporting, but at least it shows that there is an area of business that is growing.

“We are focusing on the challenges our company has faced over the past year and we are confident that we are well positioned to overcome them and our online performance continues to be strong, with customer feedback on the improvements we have made to our Multi Have been positive, and we will expand and develop our business, “said Khoo Kay Peng, chairman of Laura Ashley.

A strong international presence is now at the heart of corporate strategy. There is also a new licensing partner since the beginning of this year in India. In November, the Chinese website was put online for the first time and that was “good progress to improve its presence there”.

This international orientation makes sense, especially given the losses of retail sales space in the United Kingdom last year. The company closed 25 stores in the past fiscal year. This resulted in a 6.5% reduction in retail space, which reduced UK sales last year to £ 252 million, to £ 363.2 million in the last 74-week period.

International franchise and license sales currently account for only 7.4 percent of total sales, although Laura Ashley had 243 franchise stores in 29 countries by the end of the year. So there is still room for improvement for the company.

The last year has been sobering for Laura Ashley and they still have a lot to do to get things done.