Poor furniture sales contribute to Laura Ashley’s losses
Total group sales at Laura Ashley for the year to 30th June 2019 were down £24.7m (to £232.5m) as LFL sales declined by 3.5%, resulting in a loss (before taxation, and excluding exceptional items) of £9.8m.
An exceptional charge of £4.5m was recorded, of which £1.3m related to the write-off of an investment in a Japanese associate company.
Its furniture product category (which accounted for 28% of its business) saw sales fall by -10.1% YoY, with LFL sales down -9.0%. The retailer states that this product category – its most expensive – was impacted by weak consumer confidence, particularly at the higher price points.
Home accessories fell by -0.8%, with LFL sales up +1.1%, driven by lighting, seasonal gifting and bedlinen.
Decorating, which includes fabric, curtains, wallpaper, paint and decorative accessories, was hardest hit, with LFL sales down -13.7%, while Laura Ashley’s fashion sales enjoyed growth.
Chairman Andrew Khoo comments: “The last 12 months have proved to be a difficult trading period for the group and indeed for the retail sector as a whole.
“The primary causes for the YoY drop in profit have been the performance of home furnishing and that of our website following a re-platforming exercise which took place in November 2018.
“We have focused on the reasons why home furnishings have underperformed and have taken necessary steps to mitigate this, including adding new contemporary product to our ranges. We have taken active steps to listen to our customers and now believe that we are on an appropriate recovery path. We continue to invest in our website and are working with our online service providers to ensure that it is optimised to deliver an enhanced customer experience and to achieve the desired growth.”
At year end, the UK portfolio comprised 155 stores, a net reduction of five on the previous year. Over the coming year, Laura Ashley plans to open two new stores and close five to seven stores.
Total UK retail sales of £222.9m were recorded, alongside ecommerce sales of £51.2m (a LFL decline of -14.2%, following the re-platforming of the retailer’s website).
“As the group expands its international reach, we are delighted to announce that we have recently signed a master licensing agreement with IMG to market and develop the brand in China,” Andrew continues. “We will also be focussing on the Australian market, with the first store anticipated to open in Melbourne in 2020.
“We are also delighted with the progress of our growing licensed hospitality business.”