Shares in Laura Ashley Holdings plc (LON:ALY) (LSE:ALY.L) have dropped 9% today after the release of an investor update. Its H1 results show trading conditions have been tough and it feels that net pre-tax profit for the year will fall below market expectations.
Laura Ashley’s group sales were down slightly to £146 million from £149.8 million in H1 FY2016. Total LFL retail sales were 3.5% lower and PBT was £7.8 million versus £11 million for the FY2016 period.
Despite these falling numbers, investors in Laura Ashley may be encouraged by positives achieved by the business in H1. According to today’s investor update, its ongoing investment to enhance the online experience will add to the already rich heritage of the company and bring the stock’s offering to a wider international audience. For example, it has signed a new licence partner for the India market and it now has a presence in China, having launched a website there in November.
In the last year, Laura Ashley’s shares have slumped 30%. That’s behind retail shares such as Tesco PLC (LON:TSCO) (LSE:TSCO.L), ASOS plc (LON:ASC) (LSE:ASC.L) and J Sainsbury plc (LON:SBRY) (LSE:SBRY.L), but is ahead of Next plc (LON:NXT) (LSE:NXT.L). Sainsbury’s shares are up 7%, Tesco’s stock price is 9% higher and ASOS has gained 96%. Next’s shares have fallen 44% in the last year.
In my opinion, Laura Ashley is a relatively risky stock in which to invest at the moment. I understand it is expanding abroad and could gain from higher sales and forex benefits. However, I think there may be stocks with greater stability and financial strength within what is an uncertain UK retail sector.
Therefore, I think the likes of Tesco, Sainsbury’s and Next may prove to be better investment options for the long term. I’m also of the view ASOS could have more appeal than Laura Ashley for the long-term investor.