Fashion and furnishings group Laura Ashley has bounced back into the black, ringing up full-year profits of more than £10 million sterling. Two years ago, the company was close to collapse after an ill-conceived change of image and an over-ambitious expansion plan masterminded by US retailer Ann Iverson. The company sold off its US business for $1, was forced to launch a £25 million rescue rights issue and its auditors warned there was a "fundamental uncertainty" that the business was a going concern.
But with the aid of Asian conglomerate Malayan United Industries - which underwrote the rights issue and now owns 40 per cent of the company - the company has made a U-turn.
The £10.2 million profit recorded in the year to the end of January, compared with the £4.1 million loss registered a year earlier, was driven by home furnishings, where like-for-like sales rose nearly 20 percent. That growth has continued in the first weeks of the new financial year and finance director Jim Bellingham said the company was now planning to open one or two specialist home furnishings shops a month. It already has six, and is targeting well-off provincial towns like Nantwich in Cheshire and Sevenoaks in Kent.
The company now employs a 40strong design team, doing commercial and domestic interior designs, and supplying everything from paint to lamp shades. At the same time, Laura Ashley's clothes are also showing double-digit growth. "We have been working closely with our customers," said Mr Bellingham. "They don't want us to be trendy, but they do want us to be up to date, and they wanted a more casual feel."
The stores have been updated and the firm is "quietly and cautiously" expanding in Europe. It already operates 63 stores in Europe and plans another six in Germany this year, bringing its total there to 23.
Mr Bellingham has also brought back mail-order - axed by Ms Iverson - and has slowed e-tailing development. The firm is licensing out the name, which now adorns goods from carpets to paint and perfume and is considering licensing the brand to kitchens and garden furniture.
The Republic's four outlets outperformed the UK chains, with sales rising by 16 per cent compared to an average of 12 per cent in the UK. Three of the stores are located in Dublin on Grafton Street, Blanchardstown Centre and the Royal Liver Retail Park, while the fourth is located in Merchants Quay Shopping Centre in Cork City. Plans are to establish a number of stand-alone home furnishings stores throughout the Republic.
It was all doom and gloom though for another UK retailer Dixons. First its joint house broker lowered earnings forecasts, then Dixons was forced to admit its chairman, Sir Stanley Kalms, is retiring next year. Now another leading broker has turned bearish.
DESPITE the downturn in consumer demand in the UK, Dixons is still actively looking to acquire more outlets in the Republic, according to Fintan Tierney of Lambert Smith Hampton. The Dixons Group operate 10 stores and retail warehouses in the Republic, trading as Dixons, Currys and PC World. Jervis Street, Liffey Valley, Blanchardstown Centre and The Square, Tallaght, are the locations of the four Dixons stores, while Liffey Valley and Blanchardstown also have PC World and Currys retail warehouses. Currys also has outlets in Waterford and Galway.
After a year-end meeting with the group's finance director, Ian Livingston, Dresdner Kleinwort Wasserstein has "significantly downgraded" its earnings forecasts. That news sent the stock spinning. In a note to clients, Dresdner said it had cut its current year pretax profits forecast by 3.5 percent to £275 million and its 2002 forecast by 8 per cent to £298 million.
"This essentially means that we have lost one year's growth and that the earnings per share growth rate for this year and next is coming down to nearer 7 per cent from the double-digit rate previously expected," the note said. Dresdner said the downgrades reflected lower demand for mobile phones and desktop PCs. Ominously for shareholders, the slowing rates of demand are more down to product cycles than the macroeconomic picture.
