ALY.L Regulatory News (ALY)

27 Mar 2008 07:02

Ashley (Laura) Hldgs PLC27 March 2008 27th March, 2008 LAURA ASHLEY HOLDINGS plc ("the Company") Laura Ashley today announces results for the 52 weeks to 26 January 2008 demonstrating 5 years of consecutive profit growth. Financial Highlights • Total Group sales up 5.6% to £237.6m (2007: £225.0m) • UK retail sales up 7.2% to £187.2m • UK retail like-for-like sales down 8.7% or down 5.9% after accounting for adjustments resulting from the continued store-realignment programme • Margin rate continues to improve with a 2 percentage point increase this year • Profit before tax up 62.3% to £19.8m (2007: £12.2m). This amount includes non-recurring items: profit £4.0m (2007: loss £0.5m). • Final dividend proposed of 1.0 pence per share (20% of nominal value), making the total dividend 2.0 pence per share for the year (40% of nominal value) (2007: 1.0 pence per share) • Continued strong cash generation and an ungeared balance sheet Operational Summary • Store expansion and realignment programme succeeding. Position at 26 January 2008: 208 stores (751,000 sq. ft.) (2007: 189 stores (624,000 sq. ft.)) • Capital expenditure: £10.9m invested in the business, including £1m in new warehouse management system (2007: £5.6m) • Growing strength of online sales • Ongoing sourcing improvements and better product mix • 2007 and 2008 winner of the Homes and Gardens 'Retailer of the Year Award' Commenting on the results, Tan Sri Dr. K P Khoo, Chairman, said: "We are pleased to have delivered our fifth year of continuous profit growth,despite a challenging trading environment. The improved profitability is theresult of our successful store expansion and realignment programme, improvedproduct offering and continued focus on operational efficiency. Although our like-for-like sales have declined, we do not view this as a causefor concern. Our total sales and margin rate have both seen continuedimprovement. Whilst we are confident that our strong brand and product offering arecompelling, we remain cautious about the general trading conditions in theretail market for the year ahead." Enquiries: Laura Ashley Holdings plc 020 7404 5959 (27 March)David Cook, Finance Director 020 7880 5100 (thereafter) Brunswick 020 7404 5959Tom BuchananJames Olley Overview For the 52 weeks to 26 January 2008, we are pleased to report an increase inprofit before tax of 62.3% to £19.8m, compared to £12.2m in the previous year.The profit of £19.8m includes a pension credit of £2.3m which has occurred as aresult of a transfer value exercise that was completed on 16 July 2007. Inaddition, in the year ended 26 January 2008, we have also benefited from gainson disposals of various properties and related assets amounting to £1.7m. Total group sales were up by £12.6m (5.6%) to £237.6m, compared to the previousyear of £225.0m. Margin rate continues to improve, with a 2 percentage pointincrease this year. The improved total retail sales position was primarily dueto increased UK sales in all categories. For the year ended 26 January 2008,total UK store sales were up 7.2% to £187.2m (LFL -8.7%). Total sales growth hasprimarily been driven by our store realignment programme. However, some of thenew stores that we have opened have impacted sales from existing stores, whichhas impaired LFL sales. We believe a more accurate sales LFL, excluding existingstores impacted by new stores, to be -5.9%. Through our store realignmentprogramme, we have increased total selling space and total sales in the UK. Inaddition, other than Furniture which has remained flat, margin rates across allother categories have increased year on year. We have again increased margins as a result of our ongoing improvements insourcing, more focused promotions and better product mix. In line with increasedturnover and the addition of new stores, operating expenses (excluding theimpact of non-recurring items) have increased by 7.8% to £97.3m (2007: £90.2m). The Board has recommended a final dividend of 1.0 pence per share. When combinedwith the two interim dividends, both 0.5 pence, this takes the total dividendfor the year to 2.0 pence per share (40% of nominal value) (2007: 1.0 pence pershare). Product The UK business is split into four main categories. The relative split of UKsales is as follows: Home Accessories 30%, Furniture 28%, Decorating 23% andFashion 19%. In common with many retailers in the UK, we have experienced toughtrading conditions that have adversely impacted sales performance in all productcategories. Home Accessories The Home Accessories product category includes lighting, gifts, bed linen, rugs,throws and cushions, and epitomises Laura Ashley's focus on distinctive,inspirational and quality product offerings. During the year ended 26 January 2008, sales of Home Accessories were up 5.5%(LFL -10.0%). Our casual dining range, mirrored accessories and photo frameshave all performed well, as has our recently launched toiletry range. LauraAshley continues to seek inspiration from a wide variety of sources and werefresh a large proportion of our range every season. It is this innovation andwillingness to take creative risks that makes Laura Ashley a leader inhigh-street design, particularly in lighting. Margin improvement in this category has been driven both by better sourcing,which has resulted in higher intake margins, and by lower markdown levels. Furniture The Furniture product category includes upholstered furniture, beds and cabinetfurniture. Laura Ashley differentiates its offering from that of other retailersby the exciting use of colour and fabrics, and our mix of classic andcontemporary furniture shapes. Tough trading conditions have adversely impacted Furniture to a greater extentthan the other product categories. During the year ended 26 January 2008,Furniture sales were up 0.5% (LFL -12.8%). We continue to work on product differentiation and innovation in our furniturecategory. Our well-known ranges are regularly refreshed and updated to meetcustomer demand and to ensure that they remain relevant to contemporary living. Laura Ashley also offers individual statement pieces which can be developed andcomplemented by other items of furniture in future. More direct overseassourcing of certain furniture ranges has driven margin benefits. Decorating This category includes curtains, fabric, paint, decorative accessories and wallcoverings. During the year ended 26 January 2008, Decorating sales were up 6.9%(LFL -5.6%) reflecting the growing trend for customers to update rooms on aregular basis in-line with changing fashions. Laura Ashley was ahead of the recent wallpaper trend, and we have been buildingon this strength whilst continuing to add new designs to our archive. Statementwallpapers have continued to perform well. A new colour palette has beensuccessful across numerous product categories and we have introduced a number ofexciting decorative accessories. Faster lead times and our UK manufacturing base for this category allow us toreact quickly and effectively to consumer demand. The benefits of this strategycan be seen in the success of our Made-To-Measure curtain range. We have seen margin rate growth due to changes in product mix and sourcingarrangements. Fashion For the year ended 26 January 2008, UK retail Fashion sales increased by 7.7%(LFL -4.4%). The Fashion category has seen the largest improvement in marginrate, driven by a policy of restricting markdown largely to sale periods and theincreased use of planned, in-season point-of-sale promotions. In the spring summer season, dresses were amongst our strongest sellers, withboth plain and printed woven linen dresses a particular success. In the autumnwinter season, sales have been strong on our newly-expanded range of coats. Our use of Laura Ashley archive prints in both seasons attracted a great deal ofpositive publicity and has refreshed the brand to attract an audience that isdiverse in age and interest. UK Operations Retail Stores At 26 January 2008, the property portfolio in the UK comprised 208 stores. Wehave three main store types: 110 mixed product stores (selling all productcategories), 67 Home stores (selling the full range of Home products) and 31Home concession stores. During the year ended 26 January 2008, we opened 33 new stores totalling 155,000square feet and closed 14 mainly smaller stores totalling 29,000 square feet. Asa result, total selling space increased by 20% to 751,000 square feet. We intend to continue our store development programme, subject to our normalproperty selection criteria. Direct Our E-Commerce and Mail Order channels remain a vital part of our multi-channelretail strategy, now representing 11% of total UK retail sales. Total E-commerceand Mail Order sales were up 1.0% on last year. Within this figure andreflecting the trend we have seen over the last 4 years, E-Commerce sales wereup 30.5% and Mail Order sales were down 13.5%. We now have 529,000 registered E-Commerce customers (2007: 416,000). Our websiteand various catalogues remain important marketing tools for the brand. International Operations Franchising At 26 January 2008, there were 204 franchised stores in 27 countries worldwide.Franchising continues to be an important part of the Laura Ashley brand and weare making good progress on the review of our franchise operations. In the year ended 26 January 2008, Franchise revenues increased by 6.8% to£20.3m. Licensing In the year ended 26 January 2008, Licensing income decreased by 29.2% to £3.4mdue mainly to a fourth-quarter underperformance in North America. Dividend The Board has recommended a final dividend of 1.0 pence per share. When takenwith a first interim dividend of 0.5 pence per share and a second interimdividend of 0.5 pence per share (approved on 16 September 2007 and 16 January2008 respectively) this takes the total dividend for the year to 2.0 pence pershare (2007: 1.0 pence per share). This dividend will be proposed at the AGM on2 June 2008 and subject to shareholder approval, will be paid on 6 June 2008 toall shareholders on the register at the close of business on 9 May 2008. TheBoard will continue to review dividend payments on the basis of annualprofitability, taking into account the future development of the business. Current trading For the 7 weeks to 15 March 2008, total retail sales increased by 5.2%. For thesame period, like-for-like sales were down 8.8%. Margin rates have continued toimprove. The outlook for the UK economy is uncertain for 2008 so, whilst we are confidentthat our strong brand and product offering are compelling, we remain cautiousabout the general trading conditions in the retail market for the year ahead. Group Income StatementFor the financial year ended 26 January 2008 2008 2007 Note £m £m--------------------------- ------ -------- ---------Revenue 237.6 225.0Cost of sales (125.8) (123.1)--------------------------- ------ -------- ---------Gross profit 111.8 101.9Operating expenses (93.3) (90.7)--------------------------- ------ -------- ---------Profit from operations 18.5 11.2Share of operating profit of associate 0.3 0.4Finance income 1.0 0.9Finance costs - (0.3)--------------------------- ------ -------- ---------Profit before taxation 19.8 12.2Taxation (5.8) (4.2)--------------------------- ------ -------- ---------Profit for the financial year 14.0 8.0--------------------------- ------ -------- ---------Earnings per share - basic and diluted 1 1.90p 1.08p Group Balance SheetAs at 26 January 2008 2008 2007 £m £m-------------------------- -------- ---------Non-current assets -------- ---------Property, plant and equipment 35.4 29.0Deferred tax asset 1.8 3.7Investment in associate 3.6 3.3Investment in quoted shares 2.1 0.6 -------- --------- 42.9 36.6Current assets -------- ---------Inventories 39.5 37.7Trade and other receivables 26.7 20.8Cash and cash equivalents 29.2 31.7 -------- --------- 95.4 90.2-------------------------- -------- ---------Total assets 138.3 126.8-------------------------- -------- --------- Current liabilities -------- ---------Current tax liabilities (1.2) 2.5Obligation under finance lease - 0.2Trade and other payables 69.3 50.0 -------- --------- 68.1 52.7Non-current liabilities -------- ---------Retirement benefit liabilities 6.5 12.3Deferred tax liabilities 1.4 -Provisions and other liabilities 0.4 0.1 -------- --------- 8.3 12.4-------------------------- -------- ---------Total liabilities 76.4 65.1-------------------------- -------- ----------------------------------- -------- ---------Net assets 61.9 61.7-------------------------- -------- --------- Equity Share capital 37.3 37.3Share premium 86.4 86.4Own shares (0.8) (0.8)Retained earnings (61.0) (61.2)-------------------------- -------- ---------Total equity 61.9 61.7-------------------------- -------- --------- Group Statement of Changes in Shareholders' EquityAs at 26 January 2008 Share Share Own Retained Total Capital Premium Shares Earnings Equity £m £m £m £m £m----------------------------- ----- --- ----- --- ---- --- ----- --- -----Balance as at 29 January 2006 37.3 86.4 (0.8) (63.9) 59.0 Profit for the financial yearended 27 January 2007 - - - 8.0 8.0Dividends paid - - - (3.7) (3.7)Exchange differences on translation of investments - - - (0.6) (0.6)Purchase of own shares - - - (1.0) (1.0)----------------------------- ----- --- ----- --- ---- --- ----- --- -----Balance as at 27 January 2007 37.3 86.4 (0.8) (61.2) 61.7 Profit for the financial yearended 26 January 2008 - - - 14.0 14.0Dividends paid - - - (11.1) (11.1)Exchange differences ontranslation of investments - - - 0.1 0.1Purchase of own shares - - - (2.2) (2.2)Unrealised investment loss - - - (0.6) (0.6)----------------------------- ----- --- ----- --- ---- --- ----- --- -----Balance as at 26 January 2008 37.3 86.4 (0.8) (61.0) 61.9----------------------------- ----- --- ----- --- ---- --- ----- --- ----- Group Cash Flow StatementFor the financial year ended 26 January 2008 2008 2007 Notes £m £m----------------------------- ------ -------- --------Operating activities Cash generated from operations 2 27.2 23.5Corporation tax paid (6.0) (3.5)Dividends paid (11.1) (3.7)Finance income 1.0 0.9Finance cost - (0.3)----------------------------- ------ -------- -------- 11.1 16.9----------------------------- ------ -------- --------Investing activities Purchase of property, plant and equipment (10.9) (5.6)Sale of property, plant and equipment 1.7 0.2Purchase of investment (2.1) (0.7)Net cash received from associate 0.1 0.1----------------------------- ------ -------- -------- (11.2) (6.0)----------------------------- ------ -------- --------Financing activities Repurchase of own shares (2.2) (1.0)Payment of finance lease obligations (0.2) (0.3)----------------------------- ------ -------- -------- (2.4) (1.3)----------------------------- ------ -------- ------------------------------------- ------ -------- --------Net (decrease)/increase in cash and cash equivalents 3 (2.5) 9.6----------------------------- ------ -------- -------- Reconciliation of Net Cash Flow to Movement in Net FundsFor the financial year ended 26 January 2008 2008 2007 Note £m £m----------------------------- ------ -------- --------Net (decrease)/increase in cash and cash equivalents (2.5) 9.6Cash inflow from changes in loans and leases 0.2 0.3----------------------------- ------ -------- --------Change in net funds resulting from cash flows (2.3) 9.9Net funds at the beginning of the financial year 31.5 21.6----------------------------- ------ -------- --------Net funds at the end of the financial year 3 29.2 31.5----------------------------- ------ -------- -------- 1 Earnings per share Earnings per share is calculated by dividing the earnings attributable toordinary shareholders by the weighted average number of ordinary shares duringthe year (excluding treasury shares). 2008 2007---------------------- ----------- ------ --------- ---------Basic and diluted earnings attributable to ordinaryshareholders (£m) 14.0 8.0Weighted average number of ordinary shares ('000) -basic and diluted 736,224 741,202Earnings per share 1.90p 1.08p---------------------- ----------- ------ --------- --------- 2 Reconciliation of profit/(loss) from operations to net cash inflow fromoperating activities 2008 2007 £m £m------------------------ ----------- ---------- ----------Profit from operations 18.5 11.2Depreciation charge 4.3 5.6Profit on sale of property, plant and equipment (1.7) (0.1)Increase in inventories (1.8) (2.7)(Increase)/decrease in receivables (5.9) 1.9Increase in payables 19.3 8.7Movement in provisions (5.5) (1.1)------------------------ ----------- ---------- ----------Net cash inflow from operating activities 27.2 23.5------------------------ ----------- ---------- ---------- 3 Analysis of net funds At 27 Jan Cash At 26 Jan 2007 Flow 2008 £m £m £m------------------------ ----------- ---------- ----------Cash and cash equivalents 31.7 (2.5) 29.2Obligations under finance leases (0.2) 0.2 ------------------------- ----------- ---------- ----------Net funds 31.5 (2.3) 29.2------------------------ ----------- ---------- ---------- This information is provided by RNS The company news service from the London Stock Exchange