Tough Times for Britain’s Laura Ashley Chain
LONDON (AP) _ A visit to a Laura Ashley store, with its dark green front and blackberry sprig motif, woodsy interior and heathery scents, conjures up images of the cozy, privileged gentry of England.
You expect to bump into young, upper class ″English roses″ with cultivated accents and gorgeous complexions, who attend society balls, drive Range Rovers and adore their terriers.
But behind the scenes, times are tough for Laura Ashley Holdings PLC, the British retailer famous for popularizing the frilly clothes and home furnishings of the English countryside.
Business is suffering because of a slowdown in British and U.S. retail sales, high interest rates in Britain, and the weak dollar, which makes British goods more expensive for American buyers.
Laura Ashley as responded by entering the male market and updating its designs. Retailing industry analysts believe the company will survive the crisis and prosper.
Profits have been disappointing for the past three years, repeatedly undershooting estimates and leaving the public holding shares worth nearly half the price they fetched when Laura Ashley went public four years ago.
The company recently announced it would cut 100 jobs - the first major layoffs ever - in its struggle to restructure and boost profits.
Laura Ashley is a classic rags-to-riches tale, begun as a small cottage industry 36 years ago by Mrs. Ashley and husband Bernard on the kitchen table of a London attic flat.
It became an international force, but analysts say it has failed to change with the times. Traditional shops are near the saturation point in Britain and the United States.
However, the Laura Ashley look has proved to have enduring appeal.
Welsh-born Mrs. Ashley’s legacy includes ″a vibrant design ethos in tune with nostalgia for the past as well as the New Age ideology of the Nineties,″ fashion writer Liz Smith recently wrote in the Times of London.
A great void was created in the company when Mrs. Ashley, known as ″LA,″ died of head injuries in September 1985 at age 60 after a fall down steep stairs at her daughter’s west England home.
It happened just as the company was opening a flagship store in London and two months before Laura Ashley shares were sold on the stock market.
Mrs. Ashley’s successors insisted the business would thrive because it was a design house, not a one-woman show. But the company says her original concepts remain the foundation.
Bernard Ashley, knighted in 1987, continues as chairman, but pursues other interests, such as the development of a chain of Ashley Inn hotels.
The day-to-day management is left to John James, a Welshman and longtime employee named chief executive two years ago. The Ashleys’ son Nick, one of four children, serves as design director. The Ashley family, with the Ashley Foundation, retains 70 percent of the company’s stock.
The situation is quite different from 1985, when investors rushed to benefit from Laura Ashley’s expansion plans. Crowds lined up to buy Laura Ashley shares in a $36 million sale that was 34 times oversubscribed.
The shares sold for the equivalent of $2.12 each. Now they trade at the equivalent of $1.26 at London’s Stock Exchange.
Earnings fell 38 percent to $6.6 million or 3 cents a share, on a 15 percent revenue gain to $211 million in the six months ended July 29.
″It is having problems. It’s a very difficult phase,″ said Joan d’Olier, retail analyst at the London investment firm County Natwest Woodmac. ″There’s a lot of potential there still, but it’s very difficult to realize it.″
Analyst Kimlan Cook of the Smith New Court PLC investment firm said: ″It hasn’t been that nobody likes Laura Ashley clothes anymore. It’s just a question of translating that into profits, which Laura Ashley has quite frankly failed to do.″
Mrs. Cook blamed that failure on what she called undirected growth and inadequate financial controls. The company’s manufacturing segment, which makes most of what Laura Ashley sells, hasn’t been responding to retailing demands.
The Ashleys started printing fabrics on the kitchen table in 1953. Bernard designed furnishing prints and printing machines, Laura made place mats and scarves which she sold to London department stores.
The couple expanded into garments and eventually into accessories, wall paper and soft furnishings.
The clothes are affordable, feminine, and rural. Made of natural fabrics, they have flowing lines, wildflower prints, frills and bows. The company sells lots of sweet dresses, high neck blouses, sailor outfits, and navy blue basics.
″I don’t like ephemeral things,″ Laura Ashley once said. ″I like things that last forever, like the straw hat you’re fond of and wear all your life.″
The Ashleys moved to Wales in 1961 and six years later established company headquarters in a disused railway station in Carno.
The first Laura Ashley shop opened in London’s posh South Kensington district in 1968, and in 1974 the first American store opened in San Francisco.
The Laura Ashley look, harking back to an imagined Victorian age of bucolic simplicity, also struck a chord in the United States, where sales quickly rivaled sales at home.
At the end of its last fiscal year, Laura Ashley operated 172 stores in North America, and 164 in Britain and Ireland. It had more than 400 shops worldwide, 8,000 employees and 17 factories.
Despite the fast growth, maternal Mrs. Ashley considered employees ″an extension of our family.″ She gave them stock, ended the workweek early on Friday, and insisted the canteen serve healthy food.
Its present, more corporate-minded management has sought to slim down operations, and has broken the company into divisions responsible for their onw profits.
Laura Ashley also has been acquiring some smaller clothing and accessory businesses, updating its clothing designs to give widen appeal, and opening free-standing home furnishings stores to attract more men. It also has developed a popular ″Mother and Child″ collection of coordinated clothes.
″How long that (strategy) will take to bear fruit to the bottom line is another question,″ Mrs. Cook said.
End adv for Sunday Dec. 17