LAURA ASHLEY PROFITS GAIN IN HALF

Byline: JAMES FALLON

LONDON--Laura Ashley Holdings PLC reported sharply higher aftertax profits of $4.4 million (2.8 million pounds) on a 2.8 percent increase in sales to $232.2 million (147.9 million pounds) for the half year ended July 30 despite reporting declines in women's wear sales in the United States and United Kingdom.
This compares with aftertax profits of 1.3 million pounds on sales of 143.9 million pounds in the corresponding period a year earlier.
Earnings per share rose 450 percent to nearly 2 cents (1.21 pence) from 0.2 pence.
The profits increase reflected a $9.9 million (6.3 million pound) gain on the sale of the group's stake in its United States home furnishings subsidiary Revman Industries.
But Laura Ashley also had exceptional charges of $5.2 million (3.3 million pounds) relating to payoffs to its former chief executive Jim Maxmin, who resigned in May, and the elimination of other management positions. In addition, it had a $1.4 million (900,000 pounds) loss on the sale of its warehouse and office complex in Mahwah, N.J.
At the trading level, Laura Ashley had a profit of $5 million (3.2 million pounds), compared with trading profits of 800,000 pounds the previous year.
The North American division, which suffered large losses last year, returned to the breakeven point in the first half, said Geoff Haslehurst, the group's finance director.
Sales in North America rose 3.2 percent to $75.8 million (48.3 million pounds) from 46.8 million pounds. All of the increase came in home furnishings, with women's wear and children's wear sales falling 1.3 percent to $46 million (29.3 million pounds) from 29.7 million pounds.
Through Laura Ashley's shops, garment sales fell 6 percent on a like-for-like basis. The problem was a new design team under design director Eric Bremner that had to go through a learning curve, Haslehurst said.
"They made some directional statements in spring-summer, some of which worked and some of which didn't," he said. "But garment sales are ahead 15 percent in the first six weeks of the second half. We are confident we should be in the United States and that there is a future for the brand there."
Laura Ashley is reevaluating its store portfolio in the United States, where it has about 200 stores. The group has closed six of its Mother & Child freestanding stores and integrated these into Laura Ashley stores. It plans to do the same with the remaining stores, Haslehurst said.
In addition, the group plans to look for larger sites that can combine its women's wear, children's wear and home furnishings rather than, as in the past, opening smaller, separate fashion and home furnishing stores. The ideal site the group now is looking for is 3,500 to 4,000-square-feet.
The program is part of the group's moves to reduce overhead costs, which totaled $120.7 million (76.9 million pounds) in the first half. Other steps include a refocusing of its capital expenditure and a move to place prior seasons and discontinued merchandise on sale earlier to improve management of the supply chain.
Laura Ashley has no plans immediately to seek a chief executive to replace Maxmin, Haslehurst said. The company has recruited Graham Searle, former managing director of Dunhill Holdings PLC, as managing director. The group does not expect to seek a chief executive until its current restructuring program is completed, which will take about 12 months, Haslehurst said.
--Fairchild News Service

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