Laura Ashley issues warning after 29% fall in pre-tax profits to £7.8m
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% plunge in pre-tax profits to £7.8 million for the six months to December 31.
Retail sales over its first half, which include key Christmas trading, fell 3.5% on a like-for-like basis, putting it on a shortened list of losers over what proved to be a robust festive season elsewhere on the high street.
Shares in the group tumbled 11% 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% in the six weeks to February 11.
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 contributed to a 6% rise in operating costs to £52.3 million.
Laura Ashley chief finance officer Sean Anglim told the Press Association 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 group'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.
The group said like-for-like furniture sales fell 8% in its first half, while decorating sales dropped 6.4% and fashion was 3.2% lower.
But online sales grew by 2.1% on a like-for-like basis.
Mr 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.