Fashion and homeware 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, famous for its floral print designs, saw annual statutory pre-tax profits tumble 98 per cent from £6.3 million the previous year, as retail like-for-like sales slid 0.4 per cent.
But its under-pressure shares in morning trading as underlying profits came in better than feared, despite dropping a third to £5.6m for the year to 30 June.
The group’s statutory profits were dragged lower by a £4.7m hit on the sale of a Singapore property, which had originally been bought to become its Asian headquarters under plans to expand into the region.
UK retail sales dropped 6.3 per cent to £236m amid uncertainty in the market and the closure of stores. Laura Ashley opened one store and shut eight across the UK over the year, revealing plans to close another five in the year ahead, with two new outlets opened.
It said furniture sales were knocked in particular by weak consumer confidence, falling 4.1 per cent on a like-for-like basis, as shoppers put off buying expensive items, such as sofas and beds.
However, the group’s home accessories category, its largest division, saw like-for-like sales rise 2.9 per cent, while it was “encouraged” by its performance online, with like-for-like internet sales up 4.1 per cent and now accounting for a quarter of retail revenues.
Its fashion division was also a bright spot, with comparable sales lifting 9.7 per cent in an “extremely competitive sector”.
Laura Ashley chairman Khoo Kay Peng said “difficult trading conditions” 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 was “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 also said it was looking to expand its new hotel venture and fledgling tea rooms chain.
Retail analyst Mark Photiades at Cantor Fitzgerald said it was “another challenging year” for Laura Ashley with a further contraction in profits”.
“Whilst disappointing, there are some positive signs emerging, including strong like-for-like growth in fashion,” he added.
The news comes amid woes for fellow high street retailers such as Debenhams, as speculation mounts of a potential takeover bid by Mike Ashley and a possible merger with his newly acquired House of Fraser, which collapsed into administration earlier this month.