Despite being rescued from near-insolvency in 1998 by Malaysian investors, Laura Ashley, the English Rose of the high street, continues to wilt.
Reserves of its staple womenswear customers have dwindled as its trademark floral designs are pushed to the back of the wardrobe. Figures for the half-year to January 15 reveal a 28% drop in fashion sales. Laura Ashley hired former Dior designer Alistair Blair in May 2003 to update the look, but his designs were considered too radical for the clientele. He left in December. To add to the company's problems, home furnishings, comprising 75% of the business, suffered a 4% decline in the same period. The company blamed a tough market and reduced promotional activity. The business, indirectly controlled by Malaysian tycoon Khoo Kay Peng, has gone through chief execs at an indecent rate: 10 in 13 years. The latest, Lillian Tan, took over the reins only last month.
Although sales are down, the group says margins are up and cost-cutting measures are paying off. It expects to meet brokers' full-year profit forecasts of £3.6 million to £4.2 million. On the furnishings side, the rise in gross margin has offset the relatively small decline in sales, though the group admitted to 'difficult trading'. CFO David Cook told the Independent: 'Our fashion strategy is to continue to move more upmarket.
We have moved the range on. Clearly, we've had some issues with some core customers not being happy with the direction, but our previous offer hasn't worked for several years either.'
THE STRAIGHT TALK
Peter Jones, analyst at KBC Peel Hunt, told the Times that Laura Ashley had to address fundamental issues, but 'current trading aside, home furnishings is a good business with potential, if executed well. Just stemming the fall in fashion sales would provide a boost.' Chris Curtis of fashion industry bible Drapers told the Daily Mail: 'The problem for Laura Ashley is not that there is no place for the English Rose any more, but rather they have not succeeded in updating the look.'
The group has strongly denied rumours that it would shed its fashion business. Said Cook: 'All our new stores will sell only homewares - but I can't see how there would be no Laura Ashley fashion.' It refutes talk of a takeover bid, too. Set up by the eponymous designer in 1953, the firm could capitalise on public affection for the brand, yet it struggles to find a niche. If there is still room for the English Rose in today's shopping mall, where is it?