The previously very troubled furniture and fashion group Laura Ashley doubled its profits last year as customers snapped up mirrored jewellery boxes and linen dresses, but fewer promotions meant sales stalled in the first few weeks of the new financial year.
Pretax profits leapt 100% to £12.2m on sales up 6.6% to £225m. UK retail sales grew 10.3% to £174.6m, with like for likes up a hefty 8.2%. On a particularly encouraging note, margin continued to improve with a 2 percentage point increase for the year. Cash generation was strong and the balance sheet is ungeared.
Earnings per share rose to 1.08p from 0.56p and there is a final dividend of 0.5p, taking the full year payout to 1p.
Lillian Tan, chief executive, said: "We will continue to focus on improving upon this success and maximising the great potential of the brand through increasing efficiency, higher productivity and improving margins."
The group, which won the 2007 Homes and Gardens 'Retailer of the Year Award', attributes the strong performance to the success of the turnaround measures it has put in place over several years.
All four of its key divisions experienced strong sales growth, with home accessories up 15.2%, furniture up 3%, decorating up 11.9% and fashion ahead a hefty 25.9%.
Clothing makes up just 18pc of Laura Ashley's sales, with 30pc coming from home accessories, 29pc from furniture and 23pc from decorating. Now 12pc of UK retail sales come from mail order and the internet.
Home accessories accounts for 30% of group sales and saw underlying growth of just over 8% for the year. Popular purchases were silk bedspreads, room fragrances and mirrored jewellery boxes.
Lagging the rest of the group was the furniture division, where underlying sales slipped by 1.9%, reflecting the general malaise in the big-ticket furniture market. But margins improved as the group push through a higher proportion of full-price sales.
UK retail fashion sales over the year powered ahead by 26% in total, and 26.4% on a like for like basis, thanks to better stocking and an improved product offering. Encouragingly, this improvement was achieved without sacrificing margin, which was maintained.
Laura Ashley also has 197 franchised stores in 28 countries. However, it said franchise sales decreased by 14pc to £19m after the Middle East operation was closed and sales fell in the Far East.The group store's opening programme continued apace, with 20 new stores opened in the UK and Ireland. A similar number of new openings are planned for this year.
On current trading, Laura Ashley notes that for the eight weeks to 24 March 2007, total retail sales increased by 8.4% on increased selling space. Like-for-likes however fell 4.8%, mainly because of a reduction in promotional activity at the start of the current year, but the group assures the strong improvement in margins is being maintained.