Laura Ashley in profits warning as sales dip
Mid Wales fashion and furniture chain Laura Ashley has issued a profits warning in the face of a "demanding" trading environment.
The company, which was founded in Newtown and is headquartered in the area, 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 December 31.
It came in the wake of a 2.5 per cent drop in group sales to £146m over the period, which translated to a 3.5 per cent decline on a like-for-like basis.
The group's 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 and, given the continued market challenges, feels that net pre-tax profit for the year will fall below market expectations."
However, Dr Peng added that there had been "a number of positives" in the first half performance, including investment in its online presence which helped boost web-based revenue during the period.
"Continuing to grow and develop our international presence and explore new partnership opportunities is an important part of our strategy and we have made good progress in the half," he added.
Laura Ashley employs about 200 people at its factory in Newtown, where it makes paint, made-to-measure blinds and curtains, and wallpaper.
In the decorating division, which includes that factory, sales fell by 7.7 per cent, or 6.4 per cent on a like-for-like basis – although Dr Peng said the company was "very pleased" with reactions to its new season ranges.
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 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 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 company has stores in Shrewsbury and Telford, as well as another close to its home in Newtown.