Laura Ashley becomes latest retailer to issue warning
- Credit: PA
Embattled fashion and homeware retailer Laura Ashley has warned over annual profits after first-half earnings slumped due to lower sales and the weak pound.
The group - which has 161 stores across the UK - saw pre-tax profits tumble 45% to £4.3m for the six months to December 31, with like-for-like retail sales down 0.5%.
It blamed the weak pound as the 'most significant single factor' causing the profits fall as it continues to be hit hard by sterling's collapse since the Brexit vote.
Laura Ashley said trading conditions had been 'challenging' and 'demanding' in its first half and forecast little improvement over the final six months.
Chairman Khoo Kay Peng said: 'Trading conditions have continued to be challenging 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 June 30 2018 and, given the continued market challenges, considers that net pre-tax profit for the year will fall below market expectations.'
It comes after a tough couple of years for the group, which suffered a 72% collapse in annual profits after the Brexit-hit pound and sales declines took their toll.
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The collapse in sterling following the UK's decision to quit the European Union in 2016 ramped up import costs for retailers, which have passed the pain on to consumers.
The net result has been falling retail sales as squeezed shoppers cut back on spending.
Laura Ashley said its margins were knocked hard by the pound's weakness, although it sought to offset this with efforts to cut costs.
It said like-for-like sales since its year end were 'within expectations', but added that conditions were likely to remain challenging.
But the group said online sales were a bright spot in the half-year results, rising 5.1% to £26.9m from £25.6m a year earlier.
It also continues to push ahead with international expansion, signing a new licence partner for Thailand.
The group has 246 franchised stores in 29 overseas territories, accounting for 6.7% of total group sales.
Laura Ashley shares plunged as much as 26% at one stage soon after markets opened, before regaining their poise to stand 7% lower.