Laura Ashley continues recovery

The recovery at Laura Ashley, the clothing and home furnishings group, took another step forward yesterday when the company announced its first interim dividend since 1989. The announcement of a 0.4p payout accompanied a 73 per cent increase in pre-tax profits to pounds 5.2m for the six months to July.

In current trading Laura Ashley stores are enjoying strong sales increases in the UK though sales in the US show only a modest increase and are down sharply in Continental Europe due to the poor economic climate in some countries.

Shares in the company fell 10 per cent to 193.5p as the results were below some analysts' expectations. There was also some profit-taking after the shares' strong recent run.

Ann Iverson, the company's chief executive who joined the group last year, said she was encouraged by the performance so far. "It's been a good year for Laura Ashley. Some things have been easy, some have been tougher. But we're on track and we're very pleased about it."

The company also announced it has appointed Dino Adriano, deputy chief executive of Sainsbury's, as a non-executive director. Mr Adriano used to run Sainsbury's Homebase where Laura Ashley has concessions in 67 stores.

Ashley's sales in the six months fell from pounds 164m to pounds 156m due to the sale of the Australian operations and the withdrawal of the mail order catalogue, which will be re-introduced next spring.

Stripping out store closures, like-for-like sales rose by 3.2 per cent. In the UK, shop sales were up by 10 per cent. Home furnishings out-performed clothing in all markets and Ms Iverson said furnishings might eventually account for more than 60 per cent of group sales.

The company is working to increase margins and reduce mark-downs and costs. The supply chain is also being modified and will be reduced to a smaller number of high-quality, higher-volume suppliers.

The future of the company's in-house manufacturing plants are still under review. A total of 150 staff have been cut since last year, including 66 redundancies.