ALY.L Regulatory News (ALY)

14 Apr 2005 07:00

Ashley (Laura) Hldgs PLC14 April 2005 LAURA ASHLEY HOLDINGS plc ("the Company") Results for the 52 weeks to 29 January 2005 Summary • Profit before tax and exceptional items up 55.0% to £4.8m (2004: £3.1m) • Total Group sales (excluding Continental Europe) down 11.4% to £237.5m • Total UK sales down 15.4%, like-for-like sales down 10.2%, adjusted LFL* down 8.5% • Gross margin rate improvements and cost savings across the business • Planned realignment of UK store portfolio continues with 22 stores closed in the year and 6 new stores opened (total UK stores at 29 January 2005: 184) Commenting on the results, Lillian Tan, Chief Executive Officer, said: "Laura Ashley's improved performance in 2004 is the result of management's focuson improving gross margin rate and on reducing costs in all areas of thebusiness. We now have a cost base that is aligned with the current scale of ourbusiness, and our initiative to improve our retail portfolio continues. Retailconditions in the UK remain difficult. Our challenge is to enhance further theproduct offering in this increasingly competitive marketplace". Enquiries:Laura Ashley Holdings plc 020 7404 5959 (14 April)David Cook, Chief Financial Officer 020 7880 5100 (thereafter)Brunswick 020 7404 5959Tom BuchananJames Olley * The previous year ended 31 January 2004 was a 53-week accounting period. Theadjusted LFL percentage quoted above is based on an adjusted 52-week period toenable comparison with the 52-week accounting period ended 29 January 2005. Overview For the 52 weeks to 29 January 2005, we are pleased to report a profit beforetax and exceptional items of £4.8 million, up 55.0% compared to the profit inthe previous year of £3.1 million. Included within the reported £4.8 millionprofit is £1.0 million of property profit (2004: £1.0 million). Total Group sales, excluding Continental Europe, for the year ended 29 January2005 were down £30.7 million (11.4%) to £237.5 million. The closure andfranchise of our operations in Continental Europe reduced the number of directlyoperated stores to two (both in Paris) and reduced sales by £13.9 million(90.8%) to £1.4 million. For the year ended 29 January 2005, total UK store sales were down 15.4% to£181.5 million (LFL -10.2%). UK Fashion sales were down 37.6% on 20% lessselling space (LFL -30.3%). UK Home sales were down 4.4% on similar sellingspace (LFL -0.8%). It should be noted that the figures quoted are based on theyear ended 31 January 2004 being a 53-week accounting period. Adjustment to a52-week comparable basis would change the sales comparisons with last year asfollows: total UK retail sales down 13.2% (LFL -8.5%), UK Fashion sales down35.0% (LFL -29.0%) and UK Home sales down 2.5% (LFL +1.1%). We have beensuccessful in driving a margin rate improvement of over two percentage pointsacross the business. The focus of the business continues to be one of maintaining a strong globallifestyle brand, driving substantial Franchising and Licensing revenuesworldwide. Our focus in the UK remains multi-channel retailing through stores,Mail Order, E-commerce and our Design Service. Overall costs have reduced by 12.0% to £96.2 million. Included within thisnumber, the rationalisation of our Continental European operations resulted inan overhead reduction of £6.9 million. The balance of the saving was due tochanges in the UK store portfolio and other UK overhead savings. We willcontinue to focus on driving greater efficiencies in all areas of the business,particularly on all aspects of the supply chain. UK retail markets continue to be competitive, as evidenced by our currenttrading performance. However, the actions taken to reduce costs, improve marginrate, increase productivity and realign our store portfolio have put thebusiness in a stronger position to compete in our chosen markets. Product Traditionally, the UK business has been split between Home Furnishings andFashion. In future more emphasis will be placed on all of the various productcategories within the business. This decision reflects a truer picture of ourbusiness where, for example, Furniture and Home Accessories individually accountfor more turnover than the Fashion category. During the year ended 29 January2005, sales of our Fashion category declined as a percentage of our total UKsales from 30% to 22%. This trend, in the UK, is expected to continue in thecurrent year as we position the Fashion category as a niche brand aligned withour other categories. In addition, Fashion remains a vital part of our globalfranchise offer. Decorating The Decorating product category includes made to measure curtains, fabric, paintand wall coverings. This category represents approximately 21% of total UKretail sales. Capitalising on the trend for decorative wallpapers we have seenimproved demand in this area. Furthermore to improve customer co-ordination wehave rolled out a new integrated display technique in store to complement ourfabric range. Home Accessories The Home Accessories product category includes lighting, gift, bed linen, rugs,throws and cushions. This category represents approximately 25% of total UKretail sales. We have seen continued growth in bedspreads, which accounted for aquarter of bed linen sales in Autumn/Winter 2004. Children's rooms experienced asuccessful year with improved sales and margin growth on the previous year.There has been continued success in the sales of more fashionable glass lightingpieces. The launch of our new toiletries range has also surpassed ourexpectations. Furniture The Furniture product category includes upholstered furniture, beds and cabinetfurniture. This category represents approximately 32% of total UK retail sales.There has been continued innovation and success in our furniture ranges. Thebest example of this has been the development of the Venetian-style mirroredfurniture ranges. Fashion This category represents approximately 22% of total UK retail sales. Last yearwe announced our intention to reposition our Fashion offering as a nicheclothing brand. This change of direction was well received by the Press andfranchisees, but the response from our existing UK customers was mixed. As wecontinue to reduce our Fashion footage we expect further reductions in our UKFashion sales. As a consequence, we expect Fashion to represent closer to 14% ofour total UK sales mix by January 2006. Fashion remains an important part of theLaura Ashley product offering, not only because it still represents a keyelement of our lifestyle brand, but also because it still representsapproximately 70% of our overseas franchised sales. UK Operations Retail Stores At the year ended 29 January 2005, the property portfolio in the UK comprised184 stores. We have three main store types: 85 mixed product stores (selling allproduct categories), 45 Home stores (selling the full range of Home products)and 54 Home concession stores. During the year, significant changes were made to the UK store portfolio, todrive efficiency by identifying more cost effective locations and to focus onour changing product category mix. This has resulted in the opening of five newHome stores and one mixed product store. Additionally, eight mixed productstores have been converted to Home stores. As part of the process of realigning our property portfolio, 22 stores wereclosed during the year. It is our aim to add up to 100,000 square feet ofselling space over the next two years, including opening approximately 15 newstores over the next 12 months. Home stores tend to generate much higher ratesof return on sales compared to our other store types. We believe that there arefurther opportunities to grow the number of these stores over the next fewyears. Mail Order and E-Commerce Sales through our Mail Order and E-commerce channels now represent 11% of ourtotal UK retail business (2004: 10%) and are a vital part of our multi-channelretail strategy. Total Mail Order and E-commerce sales were £23.6 million, down5.2% on last year (down 3.2% on an adjusted 52 week basis). This was in partcaused by decision to withdraw from Mail Order Fashion to focus on HomeFurnishings. In November 2004, we were pleased to receive the ECMOD (EuropeanCatalogue Mail Order Days) award in recognition of sales growth and quality ofour Home catalogues for the second year running. Fashion product continues to besold via our web site: www.lauraashley.com. Growth in E-commerce sales continuesat 19.6%, in addition to driving sales through our stores. We now have 240,000registered E-commerce customers (2004: 150,000) and we continue to invest in thedevelopment of this important distribution channel. Manufacturing In October 2004, we announced a proposal to consolidate manufacturing operationsin one purpose built modernised and efficient site at Newtown, Powys. Thisconsolidation plan is on schedule and is expected to complete by the end ofApril 2005. International Operations Franchising In the year ended 29 January 2005, franchise sales increased by 13.8% to £26.0million driven both by new and existing franchise partners. The gross retailsales of our franchise partners would be at least £75 million, demonstrating thestrength of Laura Ashley as a global brand. Fashion represents approximately 70%of total franchise sales. There are currently 200 franchised stores in 28countries worldwide. During 2005 we will see the first Laura Ashley store openin mainland China. Licensing In the year ended 29 January 2005, Licensing income increased by 15.9% to £4.2million. We have seen increasing revenues from North America and from specificlicensees in Asia and Europe. We have signed deals in new product categoriessuch as childrenswear and continue to develop further Licensing opportunitiesglobally. Continental Europe Our exit from our loss-making retail operations in Continental Europe wascompleted at the end of January 2004. In the two years to January 2004, weclosed 45 stores and secured franchise agreements for a further 17 stores acrossContinental Europe. We have retained two directly operated stores in Paris. Dividend In light of the Group's current financial results, a dividend will not be paidthis year. Current trading Like-for-like trading in the 10 weeks to 9 April 2005 shows UK retail sales down13.9% on last year, predominantly due to our decision to realign the Fashionoffering. Our focus for 2005 will continue to be margin improvement and costmanagement rather than top line sales growth. Retail conditions in the UK remaindifficult. Our challenge is to enhance further the product offering in thisincreasingly competitive marketplace. Consolidated Profit and Loss AccountFor the financial year ended 29 January 2005 2005 2004 Notes £m £m-------------------------------------------------------------------------------Turnover 1 238.9 283.5Cost of sales (137.9) (170.9)-------------------------------------------------------------------------------Gross profit 101.0 112.6-------------------------------------------------------------------------------Operating expenses 2 (96.2) (109.3)-------------------------------------------------------------------------------Operating profit 4.8 3.3Share of operating profit of associate 0.4 0.6-------------------------------------------------------------------------------Profit on ordinary activities before interest 5.2 3.9Interest receivable 0.2 0.2Interest payable (0.6) (1.0)-------------------------------------------------------------------------------Profit on ordinary activities before taxation 4.8 3.1Taxation on profit on ordinary activities 3 (1.3) (1.1)-------------------------------------------------------------------------------Profit for the financial year 3.5 2.0-------------------------------------------------------------------------------Earnings per share - basic and diluted 4 0.47p 0.28p------------------------------------------------------------------------------- The Group's results shown above are derived entirely from continuing operations. Statement of Total Recognised Gains and LossesFor the financial year ended 29 January 2005 2005 2004 £m £m-------------------------------------------------------------------------------Profit on ordinary activities after taxation 3.5 2.0Exchange differences arising on translation of netinvestments in overseas subsidiary undertakings (0.1) (0.5)Prior year adjustment relating to the year ended 25January 2003 and before - (0.5)-------------------------------------------------------------------------------Total recognised gains for the financial year 3.4 1.0------------------------------------------------------------------------------- Balance SheetsAs at 29 January 2005 Group Company Restated Restated 2005 2004 2005 2004 Notes £m £m £m £m----------------------------------------------------------------------------------------------------Fixed assetsTangible fixed assets 31.9 33.9 3.5 2.7----------------------------------------------------------------------------------------------------Investment in associated undertaking 3.5 3.4 0.8 0.8Investment in subsidiary undertakings - - 98.5 98.5----------------------------------------------------------------------------------------------------Total investments 3.5 3.4 99.3 99.3---------------------------------------------------------------------------------------------------- 35.4 37.3 102.8 102.0----------------------------------------------------------------------------------------------------Current assetsStocks 34.9 41.8 - -Debtors 23.1 20.8 9.6 15.9Short-term deposits and cash 16.1 15.1 8.4 8.3---------------------------------------------------------------------------------------------------- 74.1 77.7 18.0 24.2----------------------------------------------------------------------------------------------------Creditors: amounts falling due withinone yearTrade and other creditors 39.9 47.4 2.9 1.9----------------------------------------------------------------------------------------------------Net current assets 34.2 30.3 15.1 22.3----------------------------------------------------------------------------------------------------Total assets less current liabilities 69.6 67.6 117.9 124.3----------------------------------------------------------------------------------------------------Creditors: amounts falling due aftermore than one yearTrade and other creditors 5.1 5.6 0.5 -----------------------------------------------------------------------------------------------------Provisions for liabilities and charges 6 0.2 1.1 0.3 0.2----------------------------------------------------------------------------------------------------Net assets 64.3 60.9 117.1 124.1----------------------------------------------------------------------------------------------------Capital and reservesShare capital 37.3 37.3 37.3 37.3Share premium account 86.4 86.4 86.4 86.4Own shares (0.8) (0.8) (0.8) (0.8)Profit and loss account (58.6) (62.0) (5.8) 1.2----------------------------------------------------------------------------------------------------Equity shareholders' funds 7 64.3 60.9 117.1 124.1---------------------------------------------------------------------------------------------------- Consolidated Cash Flow StatementFor the financial year ended 29 January 2005 2005 2004 Notes £m £m-----------------------------------------------------------------------------Net cash inflow from operating activities 8 7.2 10.6-----------------------------------------------------------------------------Dividend received from associated undertaking 0.1 0.2-----------------------------------------------------------------------------Returns on investments and servicing of financeInterest received 0.2 0.1Interest paid (0.4) (0.7)Interest element of finance lease rental payments (0.1) (0.3)-----------------------------------------------------------------------------Net cash outflow for returns on investments and theservicing of finance (0.3) (0.9)-----------------------------------------------------------------------------Net tax paid (0.8) (0.7)-----------------------------------------------------------------------------Capital expenditure and financial investmentAcquisition of tangible fixed assets (3.8) (2.4)Disposal of tangible fixed assets 1.6 1.7-----------------------------------------------------------------------------Net cash outflow for capital expenditure andfinancial investment (2.2) (0.7)-----------------------------------------------------------------------------Acquisitions and disposalsCash balances disposed of with subsidiaries - (1.5)-----------------------------------------------------------------------------Net cash outflow for acquisitions and disposals - (1.5)-----------------------------------------------------------------------------Net cash inflow before financing 4.0 7.0-----------------------------------------------------------------------------FinancingIssue of ordinary share capital - 9.0Expenses of share issue - (0.8)Loans repaid (1.8) (9.4)Capital element of finance lease rental payments (1.2) (2.6)-----------------------------------------------------------------------------Net cash outflow from financing (3.0) (3.8)-----------------------------------------------------------------------------Net increase in cash 1.0 3.2----------------------------------------------------------------------------- Reconciliation of Net Cash Flow to Movement in Net Funds 2005 2004 £m £m----------------------------------------------------------------------Net increase in cash 1.0 3.2Cash inflow from changes in loans and leases 3.0 12.0----------------------------------------------------------------------Change in net funds resulting from cash flows 4.0 15.2Other non-cash items:New finance leases (1.0) -Translation differences - 0.1----------------------------------------------------------------------Change in net funds during the period 3.0 15.3Net funds/(debt) at the beginning of the period 6.8 (8.5)----------------------------------------------------------------------Net funds at the end of the period 9.8 6.8---------------------------------------------------------------------- Notes 1 Segmental analysis Turnover Net assets Turnover Net assets 2005 2005 2004 2004 £m £m £m £m-------------------------------------------------------------------------------Retail 206.5 47.4 254.7 45.2Non-retail 32.4 16.9 28.8 15.7------------------------------------------------------------------------------- 238.9 64.3 283.5 60.9-------------------------------------------------------------------------------Profit before taxationBranch contributionRetail 18.5 20.2Non-retail 9.1 8.7------------------------------------------------------------------------------- 27.6 28.9Indirect overhead costs (22.8) (25.6)-------------------------------------------------------------------------------Operating profit 4.8 3.3 Share of profit of associate 0.4 0.6Net interest payable (0.4) (0.8)-------------------------------------------------------------------------------Profit on ordinary activitiesbefore taxation 4.8 3.1 ------------------------------------------------------------------------------- Retail turnover reflects sales through Laura Ashley managed stores, Mail Orderand Internet. Non-retail includes Licensing, Franchising and Manufacturing. Retail branch contribution reflects turnover and contribution through LauraAshley managed stores, Mail Order and Internet. Branch contribution is statedafter deducting direct operating expenses but before exceptional items, buying,marketing and administrative costs. 2005 2004 £m £m-------------------------------------------------------------------------------Turnover by destination UK & Ireland 207.2 241.6North America - 0.3Continental Europe 8.0 18.8Other 23.7 22.8------------------------------------------------------------------------------- 238.9 283.5------------------------------------------------------------------------------- 2 Operating expenses 2005 2004 £m £m-------------------------------------------------------------------------------Distribution costs (76.1) (88.0)Administrative expenses (20.1) (21.3)-------------------------------------------------------------------------------Operating expenses (96.2) (109.3)------------------------------------------------------------------------------- 3 Taxation 2005 2004 £m £m-------------------------------------------------------------------------------UK corporation taxCurrent year 2.1 1.6Prior years (1.0) (0.3)------------------------------------------------------------------------------- 1.1 1.3Relief for overseas tax (0.1) (0.3)------------------------------------------------------------------------------- 1.0 1.0Overseas tax 0.1 -Tax charge in associated undertaking 0.2 0.3-------------------------------------------------------------------------------Total current tax 1.3 1.3Deferred tax credit - (0.2)-------------------------------------------------------------------------------Taxation on profit on ordinary activities 1.3 1.1------------------------------------------------------------------------------- 4 Earnings per share 2005 2004-------------------------------------------------------------------------------Basic and diluted earnings attributable to ordinaryshareholders (£m) 3.5 2.0Weighted average number of ordinary shares ('000) -basic and diluted 743,547 702,525-------------------------------------------------------------------------------Earnings per share 0.47p 0.28p------------------------------------------------------------------------------- 5 Principal exchange rates 2005 2004 Average Period end Average Period end-------------------------------------------------------------------------------US Dollar 1.83 1.88 1.65 1.82Euro 1.47 1.45 1.44 1.47Japanese Yen 198 195 190 193------------------------------------------------------------------------------- 6 Provisions for liabilities and charges Restructuring Pensions Deferred tax Total £m £m £m £m-------------------------------------------------------------------------------At 1 February 2004 1.0 0.1 - 1.1Utilisation (0.7) (0.1) - (0.8)Release to profitand loss account (0.1) - - (0.1)-------------------------------------------------------------------------------At 29 January 2005 0.2 - - 0.2------------------------------------------------------------------------------- Restructuring provisionsRationalisation ofstore portfolio * 0.2------------------------------------------------------------------------------- 0.2------------------------------------------------------------------------------- *Onerous lease provisions which are being utilised over the length of the leaseperiod. 7 Reconciliation of movements in shareholders' funds 2005 2004 £m £m------------------------------------------------------------------------------------Profit for the financial year 3.5 2.0Other recognised losses (net) (0.1) (0.5)New share capital subscribed, after issue costs of £0.8million - 8.2------------------------------------------------------------------------------------Net addition to shareholders' funds 3.4 9.7------------------------------------------------------------------------------------Opening equity shareholders' funds as originally stated 60.9 52.0Prior year adjustment - (0.8)------------------------------------------------------------------------------------Opening equity shareholders' funds 60.9 51.2------------------------------------------------------------------------------------Closing equity shareholders' funds 64.3 60.9------------------------------------------------------------------------------------ 8 Reconciliation of operating profit to netcash inflow from operating activities 2005 2004 £m £m------------------------------------------------------------------------------------Operating profit 4.8 3.3Depreciation charge 6.3 7.3Cash element of losses on termination - 1.5Profit on sale of fixed assets (1.0) (1.0)Decrease in stocks 6.9 3.9(Increase)/decrease in debtors (2.2) 5.5Decrease in creditors (6.7) (4.7)Movement on provisions (0.8) (5.0)Net cash outflow in respect of restructuring (0.1) (0.2)------------------------------------------------------------------------------------Net cash inflow from operating activities 7.2 10.6------------------------------------------------------------------------------------ NOTE The above financial information does not constitute statutory accounts asdefined by section 240 of the Companies Act 1985. It is an extract from the 2005financial statements which have not yet been filed with the Registrar ofCompanies. The Auditors' Report, dated 13 April 2005, on the financialstatements for the year ended 29 January 2005 includes an unqualified opinionand does not contain a statement under section 237(2) or (3) of the CompaniesAct 1985. The comparative information is an extract from the statutory accountsfor the financial year ended 31 January 2004. Those accounts, on which theAuditors issued an unqualified opinion, which does not contain a statement undersection 237(2) or (3) of the Companies Act 1985, have been filed with theRegistrar of Companies. A copy of the full accounts will be sent to shareholders on the Register ofMembers as at 13 April 2005 or can be obtained from the Secretary, Laura AshleyHoldings plc, 27 Bagleys Lane, Fulham, SW6 2QA. ANNUAL GENERAL MEETING The Company's AGM will be held on Thursday, 16 June 2005 at 2:00pm at theBreakfast Room, Corus Hotel, Lancaster Gate, London, W2 3LG. This information is provided by RNS The company news service from the London Stock Exchange