Laura Ashley Asia in question

Is the Laura Ashley Asia strategy going to pay off for the ailing British homewares brand?

The quintessential British heritage retailer Laura Ashley posted a modest set of results for its full year, with like-for-like growth dampened by a less than impressive profit performance last week. Pre-tax profit before exceptional items declined 9.6 per cent to £20.7million.

As the company tries to recover its footing it is turning to Asia, it has acquired a Singapore head office to drive regional growth. But Sophie McCarthy, analyst at Verdict Retail, is just one commentator who believes that plan is flawed.

“[It’s] a move that may prove ill-advised given its international declines elsewhere,” she said in a review of the company’s recent results.

“Laura Ashley’s international franchise and licensing division is struggling, with a significant drop in sales of 28.4 per cent, largely attributable to underperformance in Japan due to macroeconomic factors,” said McCarthy.

Back in the UK, Laura Ashley closed 15 stores over the year and opened three.

“Laura Ashley is over-spaced in relation to current trading, and would be wise to focus on growth via concessions in larger retailers in order to broaden its reach and protect its bottom line,” said McCarthy, who favours that course ahead of a risky expansion strategy in Asia.

International trading drove a £14.1 million drop in group sales last financial year, despite the retailer’s comparables being compressed due to its decision to compare against 53 weeks of the previous year rather than 52.

“That said, the performance of its online business is encouraging and its venture into Laura Ashley Hotels is showing signs of success,” she said.

The home accessories category grew by 8.7 per cent on a like-for-like basis, largely as the result of product innovation and a higher participation in seasonal events throughout the year.

Fashion and decorating were weaker performers, growing just 2.6 per cent and 1.3 per cent.

“Nevertheless Laura Ashley indicated a potential new retailer partnership for its clothing offer, a likely wise move given the individuality of the brand and its relatively targeted appeal.”

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