9th Sep 2009 07:00
9 September 2009
LAURA ASHLEY HOLDINGS plc
('the Group')
Laura Ashley today announces its results for the six months to 1 August 2009 showing a resilient performance in all product categories, an increase in total Group sales and UK retail sales like-for-like increase.
Commenting on the results, K P Khoo, Chairman, said:
"In what has been a challenging consumer environment, I am pleased that Laura Ashley has once again demonstrated its resilience, out-performing the UK market ( BRC data) in all its product categories. Our international operations continue to grow and I am again pleased to report another period of growth for our E-Commerce operations. The outlook for retail remains uncertain, but I remain confident that Laura Ashley is well positioned with its key focus on operational efficiencies, excellence in product offering and multi-channel retailing.
I am encouraged by the positive start we have seen to the second half and remain cautiously optimistic that this momentum will continue through to the end of the year. The general economic outlook remains uncertain, but I have confidence in our brand, our strong and innovative product offering and our ongoing focus on maximising efficiencies in our business."
Enquiries:
Laura Ashley Holdings plc 020 7404 5959 (9 September)
Rebecca Navarednam 020 7880 5100 (thereafter)
Brunswick 020 7404 5959
Tom Buchanan
James Olley
Overview
For the 26 weeks to 1 August 2009, total Group sales were up by £7.6m (6.3%) to £127.8m, compared to £120.2m in the previous year. Total UK retail sales increased in all categories. For the same period, total UK store sales were up 6.1% to £101.5m (LFL +6.7%). Total sales growth has primarily been driven by improved product offering, increased selling space from our store realignment programme and targeted promotional activities during the period.
Although underlying gross margins have remained broadly flat and profits have increased, reported profitability has been adversely affected by foreign exchange losses for the period of £5.5m. As a result of this, the Group is reporting a profit before tax of £1.1m compared to the profit before taxation of £4.7m in 2008.
The reported profit before taxation for the 26 weeks to 1 August 2009 of £1.1m (2008: £4.7m) includes an exceptional gain on the disposal of a store of £1.0m (2008: £0.2m). Operating expenses have increased by only 0.2% to £53.3m (2008: £53.2m) following cost reductions and continued operational efficiencies against turnover growth of 6.3%.
The Board has approved an interim dividend of 0.25 pence per share (5% of nominal value) that will be paid on 12 November 2009. (2008: 0.5p).
Product
The relative split of UK sales in the 26 weeks to 1 August 2009 is as follows: Furniture 27% (H1 2008: 26%), Home Accessories 26% (H1 2008: 28%), Decorating 24% (H1 2008: 24%) and Fashion 23% (H1 2008: 22%).
Furniture
The Furniture product category includes fabric and leather upholstered furniture, beds, cabinet furniture and mirrors.
Sales of Furniture for the 26 weeks to 1 August 2009 were 19.1% up on the same period last year (LFL +9.3%) against a market that declined by 2.9 % (LFL -4.3%) according to the British Retail Consortium data.
The growth has been driven by extra promotional activity, the success of range expansions, updates and recolourations of our best sellers, improved stock management and availability.
Home Accessories
The Home Accessories product category includes lighting, gifts, bed linen, rugs, throws, and cushions. These categories include a well received range for children. The products epitomise Laura Ashley's focus on distinctive, inspirational and quality product offerings.
For the 26 weeks ended 1 August 2009, sales of Home Accessories were up 10.2% against last year (LFL +1.0%). Growth has been driven by childrens bedsets and co-ordinating accessories and our home accessories category where we have had continued success with our home fragrance, novelty door stops and cushions.
Decorating
This category includes curtains, fabric, paint, decorative accessories and wall coverings. During the 26 weeks ended 1 August 2009, Decorating sales were up 6.1% (LFL -2.4%) against the same period last year.
Wallpaper continues to be a key area for decorating. Statement wallpapers, the introduction of new colours of existing best sellers and strong stripes continue to drive sales. We have introduced a collection of special edition wallpapers for AW2009 in 24 colours from 3 of our more successful wallpaper designs.
A new state of the art wallpaper machine was commissioned at the end of 2008 and came into full operation during the period under review. The new machine has doubled production capacity and provides for an extended range of styles and designs and the potential for increased sales.
Decorative accessories had the biggest growth within this category coming from the introduction of curtain pole kits stocked in stores and continued growth of our range of drawer and door pulls.
Our Made to Measure curtains service is now available to order online.
Fashion
For the 26 weeks ended 1 August 2009, UK retail Fashion sales increased by 14.5% (LFL +8.2%) mainly driven by a stronger product offer and additional selling space from new and existing stores.
Product categories that performed particularly well were jersey dresses, jumpers and jewellery. The improved fit and the use of more modern prints worked for the jersey dresses whilst jumpers were helped by the successful performance of the nautical based stories particularly the classic striped Breton tops. On jewellery, key styles established in sterling silver have performed well. The introduction of both new and classic colours, simple and easy to wear shapes with added details and improved fit and quality have led to the success of Fashion.
UK Operations
Retail Stores
At 1 August 2009, the property portfolio in the UK comprised 231 stores, up marginally from 228 six months ago. During the period in review, the store expansion programme continued at a measured pace in response to the uncertain economic conditions. Five new stores were opened and two were closed during this period, the latter in keeping with our store realignment program. Therefore, in the 26 weeks ended 1 August 2009, total selling space increased by 1.6% to 884,000 square feet.
We have four main store types: mixed product stores (132), Home stores (67), Home concession stores (28) and Clearance Outlets (4). In July 2009, we opened a new concept store in London Liverpool Street Station which specializes in gifts and accessories. More concept stores like this will be considered going forward, subject to establishing public demand in the forthcoming months.
We have continued to expand our Space-Flex programme which optimizes sales density and trading margins by aligning the mix of products within individual stores to local demand.
Direct Sales
Our Direct Sales which comprise E-Commerce and Mail Order remain a vital part of our multi-channel retail strategy, representing 11.9% of total UK retail sales (2008: 12%). For the 26 weeks ended 1 August 2009, total Direct sales were up 7.3% on last year driven by the increase in E-Commerce sales. Within this figure and reflecting the trend we have seen over the last three years, Mail Order sales were down 26.9% and E-Commerce sales were up 36.1%. This trend has been anticipated as we have seen sales from Mail Order migrating to our website. New marketing initiatives have also contributed towards the increase in E-Commerce sales.
The E-Commerce website was updated and released in April this year with a new look and feel to the site. This has helped our customers' buying experience online. Additionally, a Made to Measure curtains and blinds service was launched online in early June.
International Operations
There are currently 228 franchised stores in 26 countries worldwide (Jan 2009: 223 franchised stores in 25 countries). Franchising activities outside the UK continue to be an important part of the Laura Ashley brand. In the 26 weeks ended 1 August 2009, franchise revenues to the Company increased by £1.0m to £9.8m partially attributed to the increase in the number of franchise stores.
Our new Middle East franchise partner has opened 2 Fashion stores in Dubai with the third Home store scheduled to be opened in mid September 2009. Our major Asian franchise partner has continued its expansion into the China market having recently opened its 5th store in Shanghai. Opportunities in various other major territories such as Russia, India and several more countries in Asia are being explored.
In the 26 weeks ended 1 August 2009, there have been several positive developments in our licensing business. Several new products have been planned to be launched in various major cities. The products include our new tabletop range of dinnerware, cutlery and table linen, gifting books, nursery bedding, linen, sleepwear and stone tiles.
Licensing income for the 26 weeks to 1 August 2009 decreased by £0.4 m due mainly to lower sales from our North American licensees. However, with several new licensing agreements signed during the period, these are expected to generate additional licensing income.
Dividend
A final dividend in respect of the financial year ended 31 January 2009 of 0.75 pence per ordinary share (15% of nominal value) was paid on 20 August 2009. When taken with the first interim dividend of 0.5 pence per share, the total dividend for the year ended 31 January 2009 was 1.25 pence per share.
On 8 September 2009, the Board approved the payment of an interim dividend of 0.25 pence per ordinary share (5% of nominal value). The interim dividend will be paid on 12 November 2009 to holders of ordinary shares on the register at the close of business on 16 October 2009.
Current Trading and Outlook
In the 31 weeks to 5 September 2009, total UK retail sales were up 11.0%. For the same period, like-for-like sales were up 5.9%. Disregarding the effects of the foreign exchange losses and despite the increased promotions compared to the same period last year, gross margins are expected to hold. The challenging trading conditions experienced in the first half are expected to continue to impact the UK retail market.
However, we are encouraged by the positive start we have seen to the second half and remain cautiously optimistic that this momentum will continue through to the end of the year. The general economic outlook remains uncertain but we are confident in our brand, our strong and innovative product offering and our ongoing focus on maximising efficiencies in our business.
Responsibility Statement
By order of the Board
Rebecca Navarednam
Chief Financial Officer
|
Condensed Group Income Statement |
||||||
|
for the 26 weeks ended 1 August 2009 |
||||||
|
26 weeks to |
26 weeks to |
52 weeks to |
||||
|
1 August 2009 |
26 July 2008 |
31 January 2009 |
||||
|
(unaudited) |
(unaudited) |
(audited) |
||||
|
|
|
£m |
|
£m |
|
£m |
|
Revenue |
127.8 |
120.2 |
260.5 |
|||
|
Cost of sales |
|
(74.3) |
|
(62.8) |
|
(142.2) |
|
Gross profit |
53.5 |
57.4 |
118.3 |
|||
|
Operating expenses |
|
(52.3) |
|
(53.0) |
|
(107.8) |
|
Profit from operations |
1.2 |
4.4 |
10.5 |
|||
|
Share of operating profit/(loss) of associate |
- |
0.1 |
(0.5) |
|||
|
Dividend income |
- |
0.1 |
0.1 |
|||
|
Finance income |
|
- |
|
0.1 |
|
0.2 |
|
Finance costs |
(0.1) |
- |
(0.1) |
|||
|
Profit before taxation |
1.1 |
4.7 |
10.2 |
|||
|
Taxation |
|
(0.3) |
|
(1.1) |
|
(3.1) |
|
Profit for the period |
|
0.8 |
|
3.6 |
|
7.1 |
|
Earnings per share - basic and diluted |
|
0.11p |
|
0.49p |
|
0.97p |
The Group's results shown above are derived entirely from continuing operations.
|
Condensed Group Balance Sheet |
||||||
|
as at 1 August 2009 |
||||||
|
At 1 August 2009 |
At 26 July 2008 |
At 31 January 2009 |
||||
|
(unaudited) |
(unaudited) |
(audited) |
||||
|
|
|
£m |
|
£m |
|
£m |
|
Non-current assets |
||||||
|
Property, plant and equipment |
38.3 |
38.8 |
39.4 |
|||
|
Deferred tax asset |
1.8 |
1.8 |
1.8 |
|||
|
Investment in associate |
4.6 |
3.5 |
4.7 |
|||
|
Investment in quoted shares |
2.1 |
2.4 |
1.5 |
|||
|
46.8 |
46.5 |
47.4 |
||||
|
Current assets |
||||||
|
Inventories |
47.6 |
42.3 |
53.1 |
|||
|
Trade and other receivables |
21.3 |
19.2 |
20.3 |
|||
|
Cash and cash equivalents |
10.0 |
14.8 |
7.9 |
|||
|
|
|
78.9 |
|
76.3 |
|
81.3 |
|
Total assets |
|
125.7 |
|
122.8 |
|
128.7 |
|
Current liabilities |
||||||
|
Current tax liabilities |
0.5 |
(1.8) |
0.5 |
|||
|
Bank borrowings |
- |
1.0 |
- |
|||
|
Trade and other payables |
64.4 |
64.2 |
69.0 |
|||
|
64.9 |
63.4 |
69.5 |
||||
|
Non-current liabilities |
||||||
|
Retirement benefit liabilities |
6.5 |
6.4 |
6.5 |
|||
|
Deferred tax liabilities |
0.4 |
1.4 |
0.4 |
|||
|
Provisions and other liabilities |
0.5 |
0.3 |
0.3 |
|||
|
|
|
7.4 |
|
8.1 |
|
7.2 |
|
Total liabilities |
|
72.3 |
|
71.5 |
|
76.7 |
|
|
|
|
|
|
|
|
|
Net assets |
|
53.4 |
|
51.3 |
|
52.0 |
|
Equity |
||||||
|
Share capital |
37.3 |
37.3 |
37.3 |
|||
|
Share premium |
86.4 |
86.4 |
86.4 |
|||
|
Own shares |
(0.8) |
(0.8) |
(0.8) |
|||
|
Retained earnings |
|
(69.5) |
|
(71.6) |
|
(70.9) |
|
Total equity |
|
53.4 |
|
51.3 |
|
52.0 |
|
Condensed Group Statement of Changes in Shareholders' Equity |
|||||
|
for the 26 weeks ended 1 August 2009 |
|||||
|
Share |
Share |
Own |
Retained |
Total |
|
|
Capital |
Premium |
Shares |
Earnings |
Equity |
|
|
|
£m |
£m |
£m |
£m |
£m |
|
Balance as at 26 January 2008 |
37.3 |
86.4 |
(0.8) |
(61.0) |
61.9 |
|
Profit for the 6 months ended 26 July 2008 |
- |
- |
- |
3.6 |
3.6 |
|
Exchange differences on translation of investments |
- |
- |
- |
(0.1) |
(0.1) |
|
Dividends paid |
- |
- |
- |
(10.9) |
(10.9) |
|
Purchase of own shares |
- |
- |
- |
(1.4) |
(1.4) |
|
Unrealised investment loss |
- |
- |
- |
(1.8) |
(1.8) |
|
Balance as at 26 July 2008 |
37.3 |
86.4 |
(0.8) |
(71.6) |
51.3 |
|
Profit for the 6 months ended 31 January 2009 |
- |
- |
- |
3.5 |
3.5 |
|
Exchange differences on translation of investments |
- |
- |
- |
1.8 |
1.8 |
|
Dividends paid |
- |
- |
- |
(3.7) |
(3.7) |
|
Unrealised investment loss |
- |
- |
- |
(0.9) |
(0.9) |
|
Balance as at 31 January 2009 |
37.3 |
86.4 |
(0.8) |
(70.9) |
52.0 |
|
Profit for the 6 months ended 1 August 2009 |
- |
- |
- |
0.8 |
0.8 |
|
Unrealised investment gain |
- |
- |
- |
0.6 |
0.6 |
|
Balance as at 1 August 2009 |
37.3 |
86.4 |
(0.8) |
(69.5) |
53.4 |
|
Condensed Group Cash Flow Statement |
||||||
|
for the 26 weeks ended 1 August 2009 |
||||||
|
26 weeks to |
26 weeks to |
52 weeks to |
||||
|
1 August 2009 |
26 July 2008 |
31 January 2009 |
||||
|
(unaudited) |
(unaudited) |
(audited) |
||||
|
|
|
£m |
|
£m |
|
£m |
|
Operating activities |
||||||
|
Cash generated from operations |
4.2 |
5.7 |
7.7 |
|||
|
Corporation tax paid |
(0.3) |
(1.7) |
(2.4) |
|||
|
Dividends paid |
- |
(10.9) |
(14.6) |
|||
|
Dividends received |
- |
0.1 |
0.1 |
|||
|
Finance income |
- |
0.1 |
0.2 |
|||
|
Finance cost |
(0.1) |
- |
(0.1) |
|||
|
3.8 |
(6.7) |
(9.1) |
||||
|
Investing activities |
||||||
|
Purchase of property, plant and equipment |
(1.8) |
(5.5) |
(9.0) |
|||
|
Sale of property, plant and equipment |
- |
0.2 |
0.2 |
|||
|
Purchase of investment |
- |
(2.1) |
(2.1) |
|||
|
Net cash received from associate |
0.1 |
0.1 |
0.1 |
|||
|
(1.7) |
(7.3) |
(10.8) |
||||
|
Financing activities |
||||||
|
Purchase of own shares |
- |
(1.4) |
(1.4) |
|||
|
Bank borrowings |
- |
1.0 |
- |
|||
|
- |
(0.4) |
(1.4) |
||||
|
|
|
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents |
|
2.1 |
|
(14.4) |
|
(21.3) |
|
Reconciliation of Net Cash Flow to Movement in Net Funds |
||||||
|
for the 26 weeks ended 1 August 2009 |
||||||
|
26 weeks to |
26 weeks to |
52 weeks to |
||||
|
1 August 2009 |
26 July 2008 |
31 January 2009 |
||||
|
(unaudited) |
(unaudited) |
(audited) |
||||
|
|
|
£m |
|
£m |
|
£m |
|
Net increase/(decrease) in cash and cash equivalents |
2.1 |
(14.4) |
(21.3) |
|||
|
Cash outflow from changes in loans and leases |
|
- |
|
(1.0) |
|
- |
|
Change in net funds resulting from cash flows |
2.1 |
(15.4) |
(21.3) |
|||
|
Net funds at the beginning of the period |
|
7.9 |
|
29.2 |
|
29.2 |
|
Net funds at the end of the period |
|
10.0 |
|
13.8 |
|
7.9 |
Notes
1. Basis of Preparation
This condensed set of financial statements has been prepared in accordance with the requirements of IAS 34 'Interim Financial Reporting' as adopted by the European Union ('EU').
As required by the Disclosure and Transparency Rules of the UK's Financial Services Authority, the condensed set of financial statements has been prepared by applying the accounting policies and presentation that were applied in the preparation of the Company's published consolidated financial statements for the financial year ended 31 January 2009, which were prepared in accordance with International Financial Reporting Standards as adopted by the EU. The statutory audited accounts for the year ended 31 January 2009 have been delivered to the Registrar of Companies in England and Wales. The Auditors' report on these accounts was unqualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985.
These half-year condensed financial statements are unaudited, not reviewed, and do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985.
2. Segmental Analysis
|
26 weeks to |
26 weeks to |
52 weeks to |
|
|
1 August 2009 |
26 July 2008 |
31 January 2009 |
|
|
Total |
Total |
Total |
|
|
(unaudited) |
(unaudited) |
(audited) |
|
|
|
£m |
£m |
£m |
|
Revenue |
|||
|
Retail |
116.0 |
109.1 |
236.3 |
|
Non-retail |
11.8 |
11.1 |
24.2 |
|
|
127.8 |
120.2 |
260.5 |
|
Profit before taxation |
|||
|
Branch contribution |
|||
|
Retail |
7.4 |
10.5 |
22.0 |
|
Non-retail |
4.4 |
4.7 |
8.6 |
|
11.8 |
15.2 |
30.6 |
|
|
Indirect overhead costs |
(10.6) |
(10.8) |
(20.1) |
|
Profit from operations |
1.2 |
4.4 |
10.5 |
|
Share of operating profit/(loss) of associate |
- |
0.1 |
(0.5) |
|
Dividend income |
- |
0.1 |
0.1 |
|
Finance income |
- |
0.1 |
0.2 |
|
Finance cost |
(0.1) |
- |
(0.1) |
|
Profit before taxation |
1.1 |
4.7 |
10.2 |
Retail revenue reflects sales through Laura Ashley's managed store, Mail Order and E-Commerce. Non-retail revenue includes Licensing, Franchising and Manufacturing.
Branch contribution is stated after deducting direct operating expenses, buying, marketing and administrative costs.
3. Taxation
Taxation has been calculated by applying the forecast full year effective rate of tax in the individual fiscal territories to the results for this period.
4. Earnings per Share
|
26 weeks to |
26 weeks to |
52 weeks to |
|
|
1 August 2009 |
26 July 2008 |
31 January 2009 |
|
|
|
(unaudited) |
(unaudited) |
(audited) |
|
Basic and diluted earnings attributable |
0.8 |
3.6 |
7.1 |
|
to ordinary shareholders (£m) |
|||
|
Weighted average number of ordinary |
|||
|
shares - basic and diluted ('000) |
729,408 |
731,063 |
729,408 |
|
Earnings per share |
0.11p |
0.49p |
0.97p |
Basic and diluted earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares during the period.
In the opinion of the directors, there are no dilutive investments.
5. Reconciliation of Profit from Operations to Net Cash Inflow from Operating Activities
|
26 weeks to |
26 weeks to |
52 weeks to |
|
|
1 August 2009 |
26 July 2008 |
31 January 2009 |
|
|
(unaudited) |
(unaudited) |
(audited) |
|
|
|
£m |
£m |
£m |
|
Profit from operations |
1.2 |
4.4 |
10.5 |
|
Depreciation charge |
2.6 |
2.1 |
5.5 |
|
Loss/(profit) on sale of property, plant and equipment |
0.1 |
(0.2) |
(0.2) |
|
Exchange movement on property, plant and equipment |
0.2 |
- |
(0.5) |
|
Change in inventories |
5.5 |
(2.8) |
(13.6) |
|
Change in receivables |
(1.0) |
7.5 |
6.4 |
|
Change in payables |
(4.6) |
(5.1) |
(0.3) |
|
Change in provisions and other liabilities |
0.2 |
(0.2) |
(0.1) |
|
Net cash inflow from operating activities |
4.2 |
5.7 |
7.7 |
6. Related Party Transactions
The related party transactions that have occurred in the 26 weeks ended 1 August 2009 are not materially different in size or nature to those reported in the Company's Annual Report for the financial year ended 31 January 2009.
Related Shares:
ALY.L