Fashion and homewares retailer Laura Ashley has warned over full-year profits after being hit by falling sales and surging costs.
The group revealed a 29 per cent plunge in pre-tax profits to £7.8 million for the six months to the end of December.
Retail sales over its first half, which include key Christmas trading, fell 3.5 per cent on a like-for-like basis.
Shares in the group tumbled 11 per cent as Laura Ashley alerted over profits amid tough trading, with like-for-like sales still in the red since the start of 2017 – down 0.6 per cent in the six weeks to 11 February.
Chairman Tan Sri Dr Khoo Kay Peng said: “Trading conditions have been demanding during the first six months of the year.
“The board have reviewed the first-half results and forecasts for the remainder of the year to 30 June 2017 and, given the continued market challenges, feels that net pre-tax profit for the year will fall below market expectations.”
The group said profits were also knocked by rising costs after the pound’s plunge in value since the EU referendum, as well as the new national living wage, which together cost it £52.3m.
Chief finance officer Sean Anglim said the group suffered in the wake of the Brexit vote, which impacted first-quarter sales.
And while it saw an improvement over the second quarter, he said the retailer’s festive performance was hit as it had one less week of clearance sales compared with a year earlier, which knocked trading for so-called big-ticket items, such as its furniture ranges.
Like-for-like furniture sales fell 8 per cent in its first half, while decorating sales dropped 6.4 per cent and fashion was 3.2 per cent lower. But online sales grew by 2.1 per cent on a like-for-like basis.
Anglim said the firm remains optimistic despite the profit warning for the full year, having recently advanced further into two major overseas markets by signing up a new franchise partner in India and launching online in China for the first time late last year.