Laura Ashley to shut clothes factory

LAURA ASHLEY, the troubled British retailer best known for its floral skirts and home furnishings, yesterday severed its 45-year tie to the garment manufacturing business by announcing that it will close its last clothing factory, cutting 150 jobs.

The news came as the group's first-half results showed mounting losses. Pre-tax loss before exceptionals grew to pounds 8.1m from pounds 7.9m last year, but 90 per cent of this originated from the US business, which the company was forced to sell to a management buyout team for a nominal $1 in April.

The group's intention to pull out of manufacturing has been public since last year, when profits from manufacturing fell by pounds 1.7m. The company will be left with two factories that produce home-furnishing goods and employ 350 staff. These are also due to be sold but will continue to supply Laura Ashley. The company's clothing needs will be met by overseas suppliers, mostly in Asia.

Stephen Cox, head of legal and financial services, said the results were in line with expectations. "They have to be taken in the context of pulling out of North America," he said.

He added that he was encouraged by current trading, as comparable sales for the first seven weeks of the second half rose 1 per cent on the same period last year. The company is also involved in a pounds 4.4m refit programme, which will revamp 63 stores by the end of the year.