LONDON — A raft of costs and poor fashion sales in continental Europe dented Laura Ashley Holdings’ bottom line, forcing it to report larger-than-expected losses in the 2002 fiscal year. In a separate statement, the company also announced that its chief executive officer, Ng Kwan Cheong, had resigned and would be replaced by Ainum Mohd-Saaid and Rebecca Annapillai Navarednam, starting June 1.
Mohd-Saaid is a former attorney general in Malaysia and Navarednam was formerly chief financial officer at Corus and Regal Hotel Group plc.
“There will be clear lines of reporting within the business, and I am confident that this structure will allow us to accelerate our strategy as a successful retailer in the U.K. and a franchiser and licensor of the Laura Ashley brand in the rest of the world,” said company chairman Khoo Kay Peng.
The home furnishings and fashion company said Thursday that net losses were $24.8 million, compared with net profits of $13 million during the previous year. Currency conversions were made at current exchange rates.
As reported in March, the company said it was expecting pretax losses, before exceptional items, of approximately $8 million due to lower-than-expected sales and margins in January 2003, higher write-downs of stock and an increase in accruals and other yearend accounting adjustments.
The company also said Thursday that it was forced to absorb a further $14.7 million in charges relating to the closure of 46 continental European stores, bringing pre-tax losses to $22.6 million, compared with a profit of $14.9 million last year.
Operating losses were $7.2 million, compared with operating profits of $13.6 million during the previous year.
Sales in the period rose 5.5 percent to $467.2 million from $442.9 million, due mostly to a 14 percent sales rise in Laura Ashley’s home furnishings business, which now accounts for 67 percent of turnover. Sales within the fashion division fell 4 percent due to the crisis in consumer confidence and the global economic downturn, the company said.
As reported, Laura Ashley plans to close 35 stores across continental Europe — including all its German units — in a bid to stem losses, but is seeking franchise partners for its remaining 18 stores, all of which are profitable. It is in advanced negotiations with a prospective franchisee for the Laura Ashley stores in Germany, Switzerland and Austria.