Unloved fashion-to-homewares retailer Laura Ashley (ALY) rallies 3.5% to 22p as finals showcase unexpected positive sales trends. The heritage home furnishings purveyor also issues an optimistic outlook statement, expressing confidence that 'Laura Ashley will remain a business with solid foundations to withstand challenges as they arise.'
Shares in the fashion, cabinet furniture and curtains purveyor have been a weak market this past year, investors concerned by a sales slump overseas and the potential impact of a Brexit-inspired economic slowdown on housing-related spending.
Yet today's finals restore a degree of confidence in the story. Reflecting a year-end date change, the iconic British brand reports profit before tax and exceptional items of £25.8 million for the seventeen months to 30 June, compared with £22.9 million for a 53-week period to 31 January 2015.
Encouragingly, UK like-for-like sales rose 4.1% over the elongated period, reflecting broad-based growth across categories. E-commerce sales grew strongly and the announcement also flags a sales hike at The Laura Ashley hotel. Disappointingly, sales at the international franchise and licensing business were crimped by a sluggish Japanese market and tough trading in Eastern Europe.
Yet chairman Tan Sri Dr Khoo Kay Peng appears chipper, 'pleased with the overall performance of the business. Continued like-for-like growth in the UK market, boosted by the good performance of our digital channel, is encouraging. I am happy that the company has signed a new licence partner for Australia and am confident that the business opportunity there will be optimised. Such partnership opportunities, in new territories, will continue to be explored and developed.'
Also shaking the stock from its torpor is the upbeat tone of the outlook statement, the chairman insistent that 'in a time of uncertainty for retail and the global economy at large, I am optimistic and confident that Laura Ashley will remain a business with solid foundations to withstand challenges as they arise.'
Though Cantor Fitzgerald Europe reduces its FY17 forecasts 'due to weaker sterling and cost pressures arising from the imposition of the new minimum wage rates', the broker sticks with its 'buy' recommendation, albeit reducing its price target from 35p to 30p. 'We still believe the Laura Ashley brand has significant potential for further expansion overseas, where results should start to recover, and the development of the on-line channel, which saw particularly strong growth in the period,' writes analyst Freddie George.