Laura Ashley is on the right lines

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The Independent Online
Laura Ashley's new chief executive Ann Iverson is clearly no shrinking violet in a floral frock. Only three months into the job she has already shaken up management at the troubled retail group.

Her outline of future strategy yesterday was lacking in detail, but there was enough for the City to form an opinion on whether she is working along the right lines.

The early answer is a qualified yes. In truth there were always only a handful of options open to her. She could have taken a knife to costs, or shrunk the business and gone even more upmarket. Instead, her chosen path is to seek a broader appeal for the Laura Ashley brand which she sees as resilient and capable of reaching a larger market. This seems sensible, although there are risks in spreading a brand too thinly. With more and larger stores , Laura Ashley will be venturing out of its protected niche.

Next's revival must provide something of a model for Ms Iverson. Like Laura Ashley, it was a single-brand group overstretched by expansion. There are differences. Laura Ashley has manufacturing problems to sort out and Next was mainly a UK brand, while Laura Ashley has stores in Europe, America and Japan. There may also be nervousness about Ms Iverson's ambition to be a larger force in the US, which has been a graveyard for UK retailers.

On yesterday's interim results, the new management has its work cut out. Pre-tax profits of just pounds 3m in the six months to July is still a grim return from half year sales of pounds 164m. More encouraging is the like-for- like increase of 12 per cent, though this has been achieved at some cost to the margin.

The company is not going to be turned around overnight. Analysts are still only forecasting profits of around pounds 10m for the full year, putting the shares, up 5p to 109p yesterday, on a recovery stock rating of nearly 40. There are risks, but the shares are worth a look.

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