theless encouraging. Profits before tax and exceptional items were up by
£9.4 million on the previous year. Restructuring costs, asset write-offs and
the strategic alliance had, however, resulted in exceptional costs of £11.8
million, leaving a net loss for the year to January 1992 of £9.1 million. This
was roughly in line with the City’s expectations, and analysts nodded in
approval at the company’s much strengthened balance sheet.
In June 1992, expectations of Laura Ashley’s imminent return to prof-
itability were fuelled when Higginson addressed a conference for institu-
tional investors in New York. Laura Ashley, he informed them, was likely
to turn in net profits of £7–8 million for the year on flat revenues. Sales
were not expected to rise significantly in 1992/93, partly due to the pro-
longed recession in all of the company’s major markets, but also because
Maxmin was determined to manage the business for profitability rather
than sales. This policy had produced a 4 per cent growth in margins in the
UK, where efforts to improve the price positioning of the brand were
already well underway. As part of a cohesive programme to implement the
repositioning, customers’ perceptions of quality had to be raised. The
shops themselves had been starved of investment for several years, so
older stores were refurbished and updated. Meanwhile, separate ‘sale’
outlets were opened well away from main shopping centres so that excess,
old or defective stock could be sold off without lowering the tone of the
high street stores.
In the light of the earlier market research, thought was given as to how
Laura Ashley might remain true to its brand values, updating its collec-
tions to appeal to the working women who still frequented its stores. In
December 1992, top fashion designer Eric Bremner was recruited to preside
over a revival of the company’s original design principles. Shortly after-
wards, a tie-up with students from the Royal College of Art was arranged
to breathe new life into the clothes collections.
The company still had plans to extend its core product range further, but
now looked towards licensing agreements as a way to widen its offer. A
range of colour coordinated carpets was subsequently produced for Laura
Ashley by Firth Carpets, a reputable carpet manufacturer. Leaflets in Laura
Ashley stores informed customers of their availability and provided a list
of approved stockists. Cross-referral schemes were set up to encourage the
carpet stockists to refer their customers on to Laura Ashley shops. The
system worked particularly well in North America where customers, unfa-
miliar with the British one-stop shopping approach to decorating, pre-
ferred to purchase home furnishings from a number of specialist retailers.
People power
As Futures Director David Oliver and his team got to grips with the
improved information systems, some clear but surprising purchase pat-
446 Relationship Marketing