Laura Ashley's fashion drive backfires

Laura Ashley admitted yesterday that its attempt to overhaul its "frumpy frocks" image had scared away some of its older customers as it unveiled a sharp drop in clothing sales.

Laura Ashley admitted yesterday that its attempt to overhaul its "frumpy frocks" image had scared away some of its older customers as it unveiled a sharp drop in clothing sales.

The struggling group had hoped that the appointment of an ex-couture designer and the launch of more fashionable clothing ranges would help restore its fortunes. But so far the strategy has backfired, with underlying clothing sales plunging 36 per cent in the six months to the end of July.

Shares in the group, which is controlled by the Malaysian conglomerate MUI, dropped 16 per cent to 14.75p. They have never recovered from the company's ill-fated attempt to build up a global empire in the wake of its founder's death in the mid-Eighties.

Mike Kingsbury, the chief operating officer, said that the group would "condense" its fashion business, which contributes around one-fifth of its UK retail sales, by opening more stand-alone home furnishings stores. The company is targeting 50 separate sites selling its heritage floral chintz prints by the end of January, up from 34 a year ago.

The retailer echoed peers such as French Connection in lamenting the collapse in its clothing sales in August in particular, describing the month as "particularly challenging". Like-for-like clothing sales remained more than one-third lower than last year, it said, raising question marks over the viability of some of its designer, Alistair Blair's, new ranges.

Mr Kingsbury said: "We knew it would be difficult. But we still believe that in the long term the future of the fashion business needs to be more fashionable. We knew there was a risk that we would lose older customers but 30 per cent of our customers are now aged between 25 and 35 years, which is something we would never have seen in the past."

The company, which is unusually run by two chief executives, neither of whom was available to defend the company's poor sales performance yesterday, said underlying sales of its home furnishings ranges rose 3 per cent during its half year. Total group like-for-like sales were 10 per cent lower.

It is reviewing its entire UK estate and plans to close some of its "expensive" high street sites. Interim losses widened to £1.2m from £1m, despite £800,000 of one-off property gains.

Rhys Williams, at Seymour Pierce, said: "It will be a long, hard slog to resurrect the fashion division, and on its current rating we must retain our negative recommendation."

Separately, Retail Stores, which owns Liberty, revealed that its preliminary losses had spiralled to £6.2m from £4.6m as its new management team struggles to revive the Regent Street department store.