Laura Ashley sticks with 'upmarket' range despite falling sales

Laura Ashley insisted it would not abandon its attempt to take its clothing range upmarket despite admitting sales are still plummeting.

The company, which is keen to shake off its "frumpy, floral frocks" image, revealed yesterday that underlying sales at its fashion division plunged 28.2 per cent during the 24 weeks to 15 January.

It recently parted company with its fashion designer, Alistair Blair, but said the decision to let him go did not signal a change of fashion direction.

David Cook, the finance director, said: "Our fashion strategy is to continue to move more upmarket. We have moved the range on. Clearly we have had some issues with some core customers not being happy with the direction but our previous offer hasn't worked for several years either." Shares in the company, which is controlled by the conglomerate Malayan United Industries, slid 4 per cent to 11.25p yesterday.

The trading update showed that even home furnishings sales, which account for three-quarters of the business, were in trouble. Underlying sales of its floral-sprigged sofas and faux antique furniture fell 4.1 per cent in the 24 weeks to 15 January. Demand for its home furnishings is faltering after the company decided to stop using promotions to drive sales. It also blamed general tough trading conditions.

Mr Cook said: "What we've lost in sales we've made up for with an improved margin rate." He said a combination of better margins and cost-cutting meant the company would meet its pre-tax profit expectations.

Mr Cook appeared to take recent criticisms of the company's lax corporate governance on board, promising that investors would see a "much more public face" from the new chief executive, Lillian Tan, after she takes up her role next month. Ms Tan replaces Ainum Mohd-Saaid, who quit two weeks ago - six weeks after her co-chief executive, Rebecca Navarednam, also resigned abruptly.

The group said underlying sales in the first 50 weeks of its year fell 10.1 per cent, dragged down by a 31.2 per cent decrease in UK fashion sales. It said margin rates "experienced sustained improvement" during the period.

Richard Ratner, an analyst at Seymour Pierce, nudged his expectations for the full-year down to £3.8m from £4m.