View from City Road: Laura Ashley fails to bloom

Let us hope that Hugh Blakeway Webb, chairman of Laura Ashley, knows more than he is telling shareholders. Otherwise, the picture looks even more bleak than yesterday's results suggest.

Almost six months after Jim Maxmin departed as chief executive, it has yet to start the search for a replacement. Mr Webb insists he needs to complete a review of the business before deciding what type of person he needs. Yet any chief executive worth his salt is going to want to conduct his own business review so why risk duplicating the effort?

In the meantime, Mr Webb trots out the same old promises of hacking back fixed costs that the company has been making since it first floated in 1985. Mr Maxmin promised it three years ago, yet Laura Ashley still boasts such luxuries as a global operations executive board as well as three other boards, four mini head offices and a staggering 800 administrative staff, almost a fifth of the group total. All this for a company with just pounds 300m in annual sales.

New efforts to boost turnover have proved as futile as ever. The debut collection from the new design team sent like-for-like sales falling everywhere, including Continental Europe, hitherto the one bright spot. Though the company has pushed the proportion of full-price sales in its US stores above its low point of 30 per cent, it is still some way below the retail average of 55 per cent. The fact that it intends to keep its 17 clearance outlets - almost a tenth of its total US stores - suggests it expects to stay that way.

Instead of investing to solve these problems, however, Mr Webb intends to cut capital spending to below depreciation.

The pounds 5.1m interim pre-tax profit announced yesterday was entirely due to disposal profits. Restructuring costs will eat into the full-year figures with a return to dividends as distant as ever. So why Mr Webb's relaxed demeanour? Perhaps it conceals frantic discussions with a bidder. But then again perhaps not. Even Aeon, already smarting from a pounds 45m loss on its 15 per cent stake, is likely to baulk at the current share price of 66p.