Laura Ashley warned on Thursday that full-year profit will come in below market expectations amid challenging conditions, as it posted a drop in interim profit and sales on the back of a weaker pound.
In results for the 26 weeks to 31 December 2017, the company said pre-tax profit fell to £4.3m from £7.8m the year before, with total group sales down 7.7% to £134.7m as it closed 25 stores in the second half of last year. Total like-for-like retail sales declined 0.5% and margins were under pressure, mostly due sterling weakness versus the dollar. Gross margin dropped to 38.5% from 41.4% the year before.
In the UK, total retail sales fell to £122.9m from £133.4m, while on a like-for-like basis, they were down 0.5%.
Online was a bright spot, however, with revenue of £26.9m, up from £25.6m in the corresponding period a year ago.
Laura Ashley said it was not recommending an interim dividend.
Chairman Tan Sri Dr Khoo Kay Peng said: “Trading conditions have continued to be challenging during the first six months of the year to 31 December 2017. The impact felt due to the weakening of sterling, year on year, was the most significant single factor in the fall of profit before tax.
“The board have reviewed the first half results and forecasts for the remainder of the year to 30th June 2018 and, given the continued market challenges, considers that net pre-tax profit for the year will fall below market expectations.
“Despite these challenges, our online performance remains strong, achieving growth of 5.1% and we look forward to the implementation of a new digital platform during the second half. We expect that this will help us to deliver further growth with its enhanced functionality.”
At 0905 GMT, the shares were down 4.1% to 5.85p.