Laura Ashley (LON: ALY) has announced a 98 percent fall in profits amid “challenging” trading conditions.
The group said that pre-tax profits fell from £6.3 million the year previous to just £100,000, leading the group to focus more on the hospitality sector.
“Based on the consumer reaction to both the hotels and the tearooms, this is now something we are taking a bit more seriously. Over the coming years you will see more Laura Ashley-branded hotels with our products both domestically and internationally,” said Sean Anglim, the chief financial officer.
“We have also had a full year to see how our tea room business has worked. Following the success of that we have opened another and we are looking at rolling this out on a bigger scale. This gives us the opportunity to drive customers back into our stores.”
Tan Sri Dr Khoo Kay Peng, the group’s chairman, said he was “encouraged” by Laura Ashley’s online sales and confirmed plans to launch a new digital platform in the next few weeks.
“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,” he added.
Online revenue increased to £59.7 million from £57.3 million. UK retail sales fell to £236 million from £252 million, whilst Sales in the home accessories, furniture and decorating divisions fell 3.6 percent, 8.2 percent and 13.9 percent respectively.
Laura Ashely still plans to invest in Asia but due to the changing retail environment, it is the “appropriate time” to sell the Singapore property.
Investors welcomed the move, sending shares up 15.7 percent to 5p in early trade.