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Sep 24, 2008
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Laura Ashley cautious on outlook after profit rise

By
Reuters
Published
Sep 24, 2008

LONDON, Sept 24 (Reuters) - Laura Ashley Holdings Plc , the British fashion and homewares retailer, said it was taking a cautious view on prospects for the second half after posting a 13 percent increase in first-half profit.


Laura Ashley collection

"Nobody can really predict the outcome of the next four months, that's why we are being cautious," Chief Executive Lillian Tan told Reuters on Wednesday.

UK retail sales on a like-for-like basis fell 8.1 percent in the first half and were down 11.6 percent in the 33 weeks to Sept 13.

"Trading conditions on the high street this year have been extremely challenging, with no indication that the economic situation is likely to improve in the short term," Chairman KP Khoo said.

The retailer, majority owned by Malaysian investors, said profit before tax and exceptional items for the 26 weeks to July 26 was 4.5 million pounds ($8.33 million), up from 4 million pounds in the same period last year.

The outcome was driven by 20 new store openings in Britain and a 1 percent increase in gross margin, which reflected better sourcing and lower markdowns.

Total group sales rose 5.5 percent to 120.2 million pounds, while UK retail sales were up 7.3 percent to 95.7 million pounds.

The retailer, which sells home accessories, furniture, decorating products and fashion, kept its interim dividend at 0.5 pence. It trades from 225 UK stores as well as 216 franchised stores in 25 countries.

"In terms of the half year the numbers were very much in-line, with a decent performance in fashion," said Nick Coulter, analyst at the retailer's house broker Numis.

Prior to Wednesday's statement he was forecasting a full year to end-Jan. 2009 pretax profit of 18.1 million pounds.

Earlier this year Laura Ashley built up a 10 percent stake in British menswear retailer Moss Bros Group Plc .

In May, Icelandic group Baugur blamed changes in the Moss Bros share register for giving up on a possible 40 million pounds bid for Moss Bros.

"We view our shareholding in Moss Bros as an investment opportunity," Tan said on Wednesday.

At 0757 GMT shares in Laura Ashley were up 0.75 pence, or 5 percent, at 15.25 pence, valuing the business at 111 million pounds.

The stock has lost 40 percent of its value over the last year but has still outperformed the FTSE UK all-share general retailers index .FTASX5370 by 5 percent.

Malayan United Industries conglomerate owns 35 percent of the company and Bonham Industries, Khoo's private investment vehicle, holds 25 percent. (Editing by Sue Thomas and Quentin Bryar)

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