• H1 pre-tax profit drops to GBP7.8m
  • Total sales down 2.5% to GBP146m
  • Fashion sales fall 5%

UK fashion and homewares retailer Laura Ashley has lowered its full-year outlook as it revealed a drop in earnings and sales in its first-half.

Profit before tax in the 26 weeks to 31 December fell to GBP7.8m (US$9.7m) from GBP11m a year earlier. The company said margins were also impacted by the combined effect of adverse foreign currency rates and underlying cost increases from a rise in the UK national living wage.

Total group sales were down 2.5% to GBP146m from GBP149.8m last year, while like-for-like retail sales fell 3.5%. Fashion sales for the 26 week period dropped 5%, with like-for-like sales for the division down 3.2%.

Online revenues climbed 2.4% to GBP25.6m from GBP25m last year.

Chairman, Tan Sri Dr Khoo Kay Peng, admitted trading conditions had been demanding during the first six months of its financial year.

"Despite the well-documented pressures in the broader commercial environment, there have been a number of positives in the first half and the business is well placed to respond to the challenges ahead. We are committed to delivering the best possible multichannel experience for our customers. Looking ahead, the ongoing investment to enhance the online experience will add to the already rich heritage of this great British Brand and bring Laura Ashley to a larger and more international audience."

As a result of the declines, the company expects net pre-tax profit for the year to fall below market expectations. Like-for-like sales for the six weeks to 11 February 2017 were 0.6% down on last year.

Sarah Johns, analyst at GlobalData, noted: "An undifferentiated proposition was also to blame – Laura Ashley risks getting left behind unless it grows shopper loyalty by encouraging repeat spend. Emphasising its strong British heritage and regularly injecting newness  into product designs will help make the retailer more relevant in the market."