Although retailers are experiencing better conditions than were seen during the recession, many are still struggling amidst fluctuating levels of consumer confidence and increasing energy bills. The exception to this rule has so far been home ware and furniture retailers, as the recent boom in the residential market has encouraged consumers to spend on home improvements – yet this is by no means an across the board situation, as demonstrated by the latest results from Laura Ashley.
The home furnishings and fashion retailer posted a like for like sales slide of 0.4 per cent for the 52 weeks to the 25th of January, largely due to the “challenging” consumer environment in the first half of the financial year. This translated to a total fall in group sales of 1.4 per cent, leaving Laura Ashley with just £294.5 million for the financial year.
Chairman of Laura Ashley, Tan Sri Dr. K. P. Khoo, admitted that the consumer environment remains challenging yet remains adamant that the retailer will be able to hold its own against an increasing number of strong competitors.
He says; “We will continue with the progress we have made in developing our brand, growing our product ranges, improving our systems and enhancing our online business.
“These initiatives, together with the growth of our international franchise business, will remain our primary focus.”
It is certainly true that the international franchise business outperformed the UK’s 200 stores in the last financial year. The European, Middle Eastern, South American and Australian stores combined saw a growth of 4.2 per cent, widening the consumer pool and taking advantage of growing economies and those recovering from the Eurozone Crisis.
One of the most surprising elements of the annual report was the fact that, despite the worrying drop in sales, Laura Ashley managed to grow annual profits by 2 per cent to £20.5 million. However, this could be something to do with the fact that the chain has joined many other retailers in requesting a drop in price from suppliers.
The Forum of Private Businesses accused Laura Ashley of “squeezing” suppliers due to the demand of an immediate 10 per cent reduction on stock ordered from suppliers, including on those which have already been made. Despite Laura Ashley insisting that it maintains a “very strong and long term” relationship with its suppliers, the FPB has claimed the ultimatum “smacks of unfairness.”
A spokesman said; “We think this demonstrates how big businesses are happy to abuse suppliers regardless of their own financial position.
“A lot of people may have supposed Laura Ashley were in trouble, but their year-end figures suggest quite the opposite.
“As this case shows, big businesses like this really need to adopt a more ethical approach and look at fairer ways of increasing profit margins without harming small firms who supply them.”
