Profit Warning Issued by Laura Ashley

By S12morela [CC BY-SA 3.0] via Wikimedia Commons

On Thursday, the fashion and home furnishings group that is known for its floral prints, Laura Ashley, issued a profit warning after reported a decline in earnings for the first half of its financial year, noting decreased sales and the continued impacts of a weak pound.

The company stated that pre-tax profits had dropped by 45 percent to £4.3m during the six-month period until the end of December 2017, amid “demanding” and “challenging” trading conditions.

The company described the weak pound as the “most significant single factor” for ithe lacklustre performance of the firm and delivered a restrained vision for the six months ahead. The shares of the company decreased sharply because of the news.

Khoo Kay Peng, the chairman of the company, stated: “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 30 June 2018 and, given the continued market challenges, considers that net pre-tax profit for the year will fall below market expectations.”

The weak pound has exposed a tentative recovery against some global currencies in the past months. However, it is still significantly lagging under where the currency was trading against the US dollar prior to the Brexit referendum of June 2016.

The said slide has resulted in an increase in inflation, which has squeezed the wallets of consumers and gave a blow to the retailers – especially those that are focused on non-essential goods. The decline has also made it more expensive for companies who are importing materials and goods into the United Kingdom.

A senior market analyst at ETX Capital, Neil Wilson, stated that part of the problem might also be because Laura Ashley had a difficult time to keep up with what the shoppers want.

Wilson said: “It’s not really kept pace with changing consumer trends.” He added that it was also not able to “stay terribly relevant.”

On Thursday, Laura Ashley said that it was attempting to offset those headwinds by reducing costs.

Like other high street retailers, the company also said that online sales continue to perform well, indicating a change in the shopping habits of consumers. The sales increased by 5.1 percent to £26.9m during the period compared to the £25.6m a year earlier.