Laura Ashley scraps dividend after profits are slashed
Laura Ashley blamed “a changing retail landscape” for a dramatic fall in profits this morning that saw them all but eradicated, and which led to its chairman not recommending a dividend for investors.
The figures
Amid a “challenging” trading environment the high street stalwart saw statutory profits crash by 98 per cent for the 12 months to the end of June, from £6.3m last year to just £100,000 this year. Pre-tax profits not accounting for exceptional items fell from £8.4m in 2017 to £5.6m this year.
Like-for-like sales were also down 0.4 per cent, and despite a four per cent uptick in online revenue and almost a 10 per cent hike in womenswear sales, total revenue for the homeware company dropped to £257.2m, down from £277 in the same period in 2017.
Online sales now comprise 25 per cent of retail revenue for Laura Ashley, bringing in £59.7m as shoppers skip the high street in favour of buying goods digitally.
Read more: Game Digital’s revenue slides but esports expansion holds promise
Why it’s important
Laura Ashley is the latest retailer to suffer a fall in pre-tax profits recently. House of Fraser, which fell briefly into administration before its £90m acquisition by Mike Ashley’s Sports Direct, is the latest victim of changing shopping habits, with most outfits citing a difficult environment. High street mainstay Game just yesterday posted a fall in revenue.
With the homeware firm’s leadership expecting such conditions to continue, it is not recommending paying out a dividend this quarter. It also said its Hotel and Tea Room concept offers it new growth and profitability opportunities, while it’s agreed a proposed £30.3 million sale of its commercial property in Singapore to reduce group net debt and improve cashflow.
What the chairman said
Chairman Tan Sri Dr Khoo Kay Peng said: “Continued margin pressure and the impact of a changing retail landscape have contributed to the overall reduction in profit before tax.
“We are, however, encouraged by the progress and continued growth being made by our online business and will be launching a new digital platform in the weeks to come. We are also pleased with the 9.7 per cent like-for-like growth of our fashion business in what is an extremely competitive sector.
“Laura Ashley’s brand is built on beautifully designed, high quality products. Whilst the trading environment will continue to be challenging, we remain resolutely confident in the underlying strength of this much loved brand, in its relevance for today’s consumer and in our strategies to both maintain and develop the brand and the company.”
What shares did
Shares were up 0.88 percentage points to a high of 5.2p in early morning trading, as investors appeared to respond positively to the retailer's Singapore asset sell-off.
Read more: Sports Direct saves House of Fraser Oxford Street from closure