Laura Ashley to overhaul its UK fashion section

Laura Ashley, the fashion and home furnishing retailer, tried yesterday to draw a line under its failure to take off in Europe, promising to overhaul its fashion lines in the UK.

The group announced in November that it would all but exit its loss-making stores in continental Europe, and yesterday it said 34 of its 65 stores had been sold off. A further 11 in the Benelux region have been franchised for the nominal price of €2, and the remaining stores in France will be sold off or franchised. The closures accounted for £700,000 of the £1m six-month loss posted by the group yesterday, but the move has already cut overheads by £3m.

The group was keen, however, to demonstrate that its UK business, which is now core to the group, was performing strongly. Like-for-like sales in the UK were up 5 per cent, although turnover across the group was down 1.5 per cent after the impact of closing the European stores.

Its fashion range felt the impact of the hot weather in the UK over the summer, with like-for-likes up only 2 per cent in the six months to 26 July as customers held back from buying its autumn range.

But the group, famed for its floral prints in the 1980s, is now undertaking a major revamp of its fashion department. The management has brought in a new design team, and is also taking steps to streamline collections and review its buying strategy.

"We are strengthening our design team and we will start to see the benefits come through in the spring and summer of next year," David Cook, the finance director, said.

The group said the summer weather, however, had not led to the same problems for its home furnishings department. Despite the weather and the slowing housing market, like-for-like sales of home furnishings in the 26 weeks to 26 July were up 6 per cent. Cabinets and accessories were the most popular of its products.

Sales through mail order catalogues are also taking off, with sales up 38 per cent, mainly of home furnishing goods. The company said it had opened three new stores in the UK in out-of-town retail parks. Analysts upped their forecasts for the company to £2m profit for the year.

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