Laura Ashley to close two factories

Chief executive expects half-year loss of pounds 4.5m

Nigel Cope

City Correspondent

Laura Ashley confirmed its investors' worst fears yesterday when it issued a long-expected profits warning and announced the closure of two of its factories in Wales with the loss of almost 200 jobs.

The severity of the announcement caused dismay in the City as the company said it would record a pounds 4.5m loss at the half-year stage and would only break even at the full year.

The warning, which included fresh disappointment about a slowdown in home furnishings sales, will intensify the pressure on Ann Iverson, the company's American chief executive who was paid pounds 1m last year, to step down. She was appointed 18 months ago to revive the ailing company's fortunes.

Laura Ashley has had a dreadful few months, with a string of senior executives, including design and buying director Basha Cohen, leaving the group. Now Ms Iverson has been forced to put US expansion plans, the central part of her new strategy, on hold. The shares, which have been as high as 220p in the past 12 months, closed a penny lower at 55.5p.

Nick Bubb, retail analyst at Societe Generale Strauss Turnbull, said: "It's pretty hopeless. It is a very real shortfall and there is no hint of an apology."

Another analyst said Ms Iverson's position was looking increasingly vulnerable: "She's paid a lot of money and she's made a lot of mistakes. Where is the accountability? If the business is not pointing in the right direction by next spring she will have to think again."

Ms Iverson said yesterday that she was determined to stay at the company and see her strategy through: "I am deeply committed and I believe the strategy is right. The potential of the brand has not been realised."

She said she did not regret returning to Britain from her native America to take the job: "Absolutely not. I believe the brand has potential but the scale of the problems were greater than anticipated."

Ms Iverson said Sir Bernard Ashley, Laura Ashley's widow, whose family speaks for 35 per cent of the group, had not discussed taking the group private. She said both Sir Bernard and the Japanese group Jusco, which also owns a substantial stake, were supportive of the strategy.

Ms Iverson will receive a pay cut to just her basic salary of pounds 450,000 this year as the performance of the company is too poor to trigger bonus payments

The pounds 4.5m first-half loss will include a pounds 1m charge for the closure of two garment sewing factories in Wales at Caernarfon and Machynlleth. The company will increase sourcing from overseas, though two other garment factories in Wales are unaffected.

The decision was criticised both by the unions, who blamed the closures on poor management, and the local mayor, William Jones, who said it was a devastating blow to local employment: "The saddest thing is that there is nothing else here. There is no other work for these girls."

Laura Ashley blamed its profits warning on a slowdown in sales following a return to full-price retailing, continued below-budget sales in new stores in the United States and a pounds 2m advertising campaign in America.

Laura Ashley will not open any further stores in the US until the new store performance improves. Ms Iverson said the company would continue to offer women's wear, children's wear and home furnishings. "The breadth of the brand is not the issue. It is the infrastructure," she said.

The company's systems have not been able to ensure that the right product reached the right locations at the right time. Group like-for-like sales were 11 per cent up in the six months to 26 July. However, adjusting the figures for currency effects brings the total to 5 per cent.

The company has been affected by boardroom departures, including its merchandising director and UK finance director. An announcement on the design appointment will be made soon.

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Pricing Analyst

£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

Guru Careers: C# Project Team Lead

£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

Day In a Page

Why the cost of parenting has become so expensive

Why the cost of parenting has become so expensive

Today's pre-school child costs £35,000, according to Aviva. And that's but the tip of an iceberg, says DJ Taylor
Fifa corruption: The 161-page dossier that exposes the organisation's dark heart

The 161-page dossier that exposes Fifa's dark heart

How did a group of corrupt officials turn football’s governing body into what was, in essence, a criminal enterprise? Chris Green and David Connett reveal all
Mediterranean migrant crisis: 'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves,' says Tripoli PM

Exclusive interview with Tripoli PM Khalifa al-Ghweil

'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves'
Raymond Chandler's Los Angeles: How the author foretold the Californian water crisis

Raymond Chandler's Los Angeles

How the author foretold the Californian water crisis
Chinese artist who posted funny image of President Xi Jinping facing five years in prison as authorities crackdown on dissent in the arts

Art attack

Chinese artist who posted funny image of President Xi Jinping facing five years in prison
Marc Jacobs is putting Cher in the limelight as the face of his latest campaign

Cher is the new face of Marc Jacobs

Alexander Fury explains why designers are turning to august stars to front their lines
Parents of six-year-old who beat leukaemia plan to climb Ben Nevis for cancer charity

'I'm climbing Ben Nevis for my daughter'

Karen Attwood's young daughter Yasmin beat cancer. Now her family is about to take on a new challenge - scaling Ben Nevis to help other children
10 best wedding gift ideas

It's that time of year again... 10 best wedding gift ideas

Forget that fancy toaster, we've gone off-list to find memorable gifts that will last a lifetime
Paul Scholes column: With the Premier League over for another year, here are my end of season awards

Paul Scholes column

With the Premier League over for another year, here are my end of season awards
Heysel disaster 30th anniversary: Liverpool have seen too much tragedy to forget fateful day in Belgium

Liverpool have seen too much tragedy to forget Heysel

Thirty years ago, 39 fans waiting to watch a European Cup final died as a result of a fatal cocktail of circumstances. Ian Herbert looks at how a club dealt with this tragedy
Amir Khan vs Chris Algieri: Khan’s audition for Floyd Mayweather may turn into a no-win situation, says Frank Warren

Khan’s audition for Mayweather may turn into a no-win situation

The Bolton fighter could be damned if he dazzles and damned if he doesn’t against Algieri, the man last seen being decked six times by Pacquiao, says Frank Warren
Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

Blundering Blair quits as Middle East peace envoy – only Israel will miss him

For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – his appointment was an insult, says Robert Fisk
Fifa corruption arrests: All hail the Feds for riding to football's rescue

Fifa corruption arrests

All hail the Feds for riding to football's rescue, says Ian Herbert
Isis in Syria: The Kurdish enclave still resisting the tyranny of President Assad and militant fighters

The Kurdish enclave still resisting the tyranny of Assad and Isis

In Syrian Kurdish cantons along the Turkish border, the progressive aims of the 2011 uprising are being enacted despite the war. Patrick Cockburn returns to Amuda
How I survived Cambodia's Killing Fields: Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape the US

How I survived Cambodia's Killing Fields

Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape to the US