Laura Ashley expands home ranges

Last week Laura Ashley revealed plans to reduce its loss-making fashion business in favour of building up its home ranges. The company emphasized that it had no intention of closing its fashion business.

The group suffered another difficult year in which it fired two joint chief executives and one fashion director. Meanwhile, like-for-like sales continued to fall.

Lillian Tan, the group's 11th chief executive in 14 years, wants to trim down fashion as a percentage of group sales from 22 per cent to 14 per cent over the next 12 months. Unfortunately the fashion branch of the business could not shake its stuffy, sugar-sweet image, despite various efforts to update it. Fashion sales currently equal those of the group's wallpaper-to-curtains decorating arm.

Underlying fashion sales in the UK dropped 29 per cent last year, compared with a 1 per cent rise of like-for-like sales in its home arm. In the 10 weeks to 9 April, like-for-like UK sales were 14 per cent lower. Customers had obviously not responded to the company's efforts to turn the fashion business around. Laura Ashley further admitted that there had only been a "mixed" response to its efforts to restyle the clothes as a niche brand.

The company's aim is to reduce the clothing arm to a smaller, more exclusive division. Tan said that prices would rise by as much as 20 per cent.

Laura Ashley will, however, not relinquish its fashion business entirely as it is a vital ingredient to the group's desire to position itself as a "lifestyle brand". Furthermore, it comprises 70 per cent of its overseas franchise sales. The company has 200 franchise stores in 28 countries and reported a rise in franchise sales of 14 per cent to GBP26 million last year.

Laura Ashley plans to open up to 40 home furnishings stores over the next two to three years.