Laura Ashley shares dive: Poor first six months cannot be made up later
Laura Ashley's share price fell over nine per cent as interim results missed expectations and the prospect of cost and currency headwinds spooked investors.
The figures
Total group sales over the six months to December fell from £150m to £146m, with like-for-like sales down 3.5 per cent.
Profit before tax was £7.6m compared with £11.0m in the first half of 2016/17.
Online revenue nosed up from £25.0m to £25.6m and the firm said it would pay an interim dividend of 0.5p per share.
Why it's interesting
The underperformance in the first half led to Laura Ashley warning it wasn't going to be able to make up on lost ground by its year-end in June.
Read more: Online purchases boost Laura Ashley
"The board has reviewed the first half results and forecasts for the remainder of the year to 30 June 2017 and, given the continued market challenges, feels that net pre-tax profit for the year will fall below market expectations," said chairman Tan Sri Dr Khoo Kay Peng
Laura Ashley is facing a number of considerable headwinds, not least the impact on the firm's cost base of the implementation of the national living wage.
And experts have urged the government to redouble its efforts to make sure smaller businesses in particular are paying workers correctly.
Clive Lewis, the head of enterprise at the accountancy body ICAEW said:
It’s vital that all businesses ensure they adhere to employment law by paying their employees the correct amount.
"Not doing so could result in a significant financial loss for small businesses, as they will be required to pay fines on top of re-payments to staff. It’s crucial that Government reaches out to smaller businesses who may be in the dark about the correct procedure," he added.
Read more: Flower Power: Laura Ashley plots expansion in Asia
What the company said
Khoo added: "Trading conditions have been demanding during the first six months. Despite the well-documented pressures in the broader commercial environment, there have been a number of positives in the first half and the business is well placed to respond to the challenges ahead.
"Continuing to grow and develop our international presence and explore new partnership opportunities is an important part of our strategy and we have made good progress in the half. We are also pleased to now have a presence in China, having launched a website in November."
What analysts said
Freddie George of Cantor Fitzgerald said: "The combined effect of the interim figures being below expectations, a more cautious view of like-for-like in the next six months and the current headwinds of weaker sterling and cost pressures arising from the implementation of the new minimum wage rates will continue to negatively impact results."