The price slumped 17p to 70p yesterday as the company's stockbroker, Kleinwort Benson, cut its profit forecast for the year ending this month.
A disastrous experience in the important US market has left hopes for a significant revival this year in tatters.
The US connection has prompted Kleinwort to reduce its forecast from pounds 6m to pounds 2m, but it is holding next year's estimate at pounds 12m.
In its successful days Laura Ashley achieved profits of pounds 23m. But in the past three years it has suffered losses totalling pounds 25m and the famous group's survival at one time seemed in danger.
The recovery looked to be gathering strength at the interim stage and the modest pounds 6m profit for the year seemed assured.
It would have underlined the revival masterminded by Jim Maxmin, an ebullient American recruited from Thorn EMI, the electrical and show business group.
Laura Ashley's setback emerged the same week as the Alexon clothing group said it would not pay a final because of disappointing trading.
Other clothing and fashion shares were unsettled by the latest unstitching of Laura Ashley. Claremont Garments fell 8p to 313p and SR Gent 7p to 43p.
The FT-SE 100 index, helped by New York, ended up 5.9 points at 2,765.1. In the two-week account the index fell almost 100 points, wiping out much of the gains scored over the Christmas-New Year holiday.
Although shares hit a new peak on the first day of the account there was at one time a danger that they would suffer their longest retreat since the mid-1980s. But a re-emergence of interest rate hopes ended the decline.
Blue chip trading was dominated by profit downgrading and rights issue fears. But such inhibitions were much less evident among second liners and the tiddlers as investors chased their recovery hunches.
Most forecasts for the year-end FT-SE 100 index stretch above 3,000. Highest appears to be from Nomura, the Japanese securities house, looking for 3,500. JP Morgan, the US group, sees 3,200, Kleinwort 3,050 and NatWest Securities 3,000.
British Petroleum was one leader hit by rights issue worries. It also suffered from profit downgradings. Morgan Stanley, the US house, started the profit rethink followed by Kleinwort.
Societe Generale Strauss Turnbull believes the shares, off 4p to 228.5p in heavy trading, should be sold down to 168p.
Burmah Castrol was another oil group to run the analyst mill, with Hoare Govett and UBS Phillips & Drew offering 'take profits' advice. The shares fell 7p to 688p.
Hoare Govett was also believed to have turned cautious on Lucas Industries, the market's current takeover favourite, as the shares fell 4p to 145p.
Eurotunnel improved 12p to 389p on rumoured bullish comments by French analysts. Euro Disney jumped 28p to 778p on the arrival of a new chairman.
Bass, the brewer, ended 3p higher at 599p, shrugging off the second sell circular to appear this week. NatWest believes the shares are expensive and fears that Ian Prosser, chairman, will, for the third year running, make a gloomy statement at next week's shareholders' meeting.
Earlier, Kleinwort suggested switching into Allied-Lyons and Grand Metropolitan.
Among building materials Redland put on 6p to 431p as the conviction grew that it would, after all, hold its dividend for this year and next.
Laporte, the chemical group taking over Evode, continued to improve as Goldman Sachs joined another US house, Lehman Brothers, in supporting the shares, up 10p to 625p.
Baldwin, the camping holiday group taking over the Simpsons of Cornhill restaurant chain, rose 10p to 98p on expectations of heavy holiday demand. Resort Hotels continued to improve, up 3p to 39p, ahead of results.
The Panmure Gordon recommendation lifted Grosvenor Inns 9p to 99p. Rubicon, the shopfitter, advanced 10p to 133p on hopes of a return to the dividend list next week.
The old chestnut that Boddington Group was contemplating a renewed bid for the rival pub company JA Devenish went the rounds. Devenish rose 5p to 286p. But in some quarters there is a growing belief that Boddies will abandon its Devenish ambitions and place its near-20 per cent shareholding in the market.
The current Devenish price would allow it to withdraw with a profit. Boddington was unchanged at 193p.
The account, which opened with a roar, ended with a whimper yesterday as the FT-SE 100 index closed 5.9 points higher at 2,765.1. The FT-SE 250 index rose 2.5 to 2,890.6. Trading was often brisk, with turnover reaching 616.4 million shares with 31,848 bargains. Government stocks had another quiet session.
ML Laboratories advanced 20p to 1,118p yesterday, anticipating an investment presentation arranged by Hoare Govett. The medical research group should have a cheerful tale to tell. At the start of the year it won a UK marketing licence for its Dextrin 20 kidney dialysis drug, which should transform the still lossmaking group's outlook. The shares were 679p last year.
There is no holding Telemetrix, the electronics company. The shares, which started the account at 88p, rose a further 14.5p to 110.5p in steady volume. Its 62 per cent holding in GTI Corporation, the American maker of computer networking devices, is said to equate to 125p per Telemetrix share. Dealers believe there is still plenty of strength left in Telemetrix shares.