Laura Ashley downgrades fashion in favour of wallpaper and curtains

Laura Ashley unveiled plans yesterday to shrink its loss-making fashion business but insisted it had no plans to stop selling clothes.

Laura Ashley unveiled plans yesterday to shrink its loss-making fashion business but insisted it had no plans to stop selling clothes.

After another disastrous year for the group, in which it sacked two (joint) chief executives and one fashion director amid plunging like-for-like sales, it has opted to expand its home ranges at the expense of clothing.

Lillian Tan, the group's 11th chief executive in 14 years, plans to decrease fashion as a percentage of group sales to 14 per cent from 22 per cent during the next 12 months. Fashion, which still conjures up images of floral-sprigged tea frocks even after years of attempting to diversify, already barely achieves more sales than the group's wallpaper-to-curtains decorating arm.

Underlying fashion sales in the UK fell 29 per cent last year, against a 1 per cent gain in like-for-like sales from its home arm. In shrinking its clothing business, the company plans to offer fewer, more expensive products. Prices will shoot up by as much as 20 per cent, Ms Tan said.

In the 10 weeks to 9 April, like-for-like sales in the UK were 14 per cent lower, implying that customers have not taken well to the group's spring ranges. The company admitted that it has had only a "mixed" response to its attempts to reposition its clothes as a niche brand.

But Ms Tan insisted she would never stop selling clothes, which are an important element of the group's aspirations to offer a "lifestyle brand" and also comprise 70 per cent of its overseas franchise sales. It has 200 franchise stores in 28 countries and said franchise sales rose 14 per cent to £26m last year.

In the UK, its expansion plans include an ambitious opening programme for its home furnishings stores. It intends to open 100,000 square feet - up to 40 stores - over the next two to three years in a move that will force it to abandon its previously strict site- choosing criteria. Traditionally, the quintessentially English retailer has chosen Tudor buildings that help to convey the brand's heritage.

The group reported pre-tax profits of £4.8m, up from £3.1m. The figure was boosted by £1m of proceeds from property disposals. For the eighth year in a row there was no dividend.