Laura Ashley’s sales held up remarkably well in the first half given the difficult background for retailers. Like-for like sales rose by an impressive 6.7 per cent in the UK, with only decorating falling back slightly. Exclude a £5.5m currency hit that effectively eliminated earnings, and profits would have been up almost £2m.
A modest increase in selling space helped, but progress came chiefly from improvements to the range and promotions, plus a focus on cost-cutting. The international franchising operations continue to perform well and raised their contribution, helped by a small increase in the number of stores, including a push into Dubai and China, with the fifth store opened in Shanghai. Other Asian countries such as India are being targeted, as is Russia. And, although partly at the expense of the mail order operation, internet sales are growing strongly, up by over a third in the first half, and trading has got off to a reasonable start in the second half, given the constraints on consumer spending.
Thanks to cost cutting, margins are expected to hold and the decorating unit should benefit from the new wallpaper machine that has doubled capacity and will also help extend the range. So Numis Securities is maintaining its forecast of full-year pre-tax profits of £11.5m and EPS of 1.1p (£9.6m and 0.9p in 2009), rising to £12.4m and 1.2p, respectively, in 2011.
LAURA ASHLEY (ALY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 20p | MARKET VALUE: | £145m | |
| TOUCH: | 19-20p | 12-MONTH HIGH: | 20p | LOW: 9.5p |
| DIVIDEND YIELD: | 5.1% | PE RATIO: | 33 | |
| NET ASSET VALUE: | 7p | NET CASH: | £10m | |
| Half-year to 1 Aug | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 120 | 4.7 | 0.49 | 0.50 |
| 2009 | 128 | 1.1 | 0.11 | 0.25 |
| % change | +6 | -77 | -78 | -50 |
Ex-div: 14 Oct Payment: 12 Nov | ||||
