Laura Ashley is better known for its home furnishings and fashion industries, but has lately been enhancing its market presence by opening 2 branded hotels, firstly, The Manor: a beautifully idyllic 16th century converted manor house, just off the M1 near Elstree, which has been open since 01 August 2013. More recently, The Belsfield has been opened: an absolutely stunning mixture of contemporary design and historic architecture that is elegantly poised overlooking Lake Windermere.
Unsurprising, The Manor, being well positioned to capture high net worth individuals, is thriving, with latest figures revealing a 37% increase in turnover, year-on-year. Early indications are also positive for The Belsfield from both customers and media.
Laura Ashley is also making a strategic push into Asia, by procuring a key piece of real estate in Singapore for £31.1m, which is expected to enhance its Asian positioning and provide an opportunity to better pursue targeted audiences of China and India. 35% of this purchase is being funded from cash reserves.
Financially, Laura Ashley is looking strong when compared to its peers, with its niche individual interior design service evolving from the financial rout that has knocked all and sundry since 2008, showing promising growth of 10% over the last year. Importantly, Laura Ashley is pursuing its web presence with vigour, which in turn has helped its international brand recognition grow 8.6%.
Group profits for 51 weeks to 31 January 2015 were reported as improving by 14.6% to £23.5m on sales that were up 3.1% to £303.6m indicating improved margins are being pushed through successfully, which in turn resulted in an earnings per share boost of 16.7% to 2.51p.
Technically, shares are in an exceptionally elongated trading range of 10p to 34p stretching back to February 1998, yes that’s right, 17 years. Occasional forays outside this range proved to be fairly short lived and mostly on the downside, but things have been looking different lately. Between April 2015 and June 2015 shares powered upwards from circa 27.5p to circa 35p before falling back equally as quickly. Shares seem to be testing this upper limit.
There is an intriguing chart pattern termed a cup and handle, which if broken to the upside can herald a nice up run! Laura Ashley has formed a cup and handle with the cup aspect between May 2007 and March 2013 and handle aspect completed in December 2014. Significantly, a breakout to the upside occurred when shares rallied to 35p recently. If upside is now released in conformance with cup and handle patterns then shares could well run to circa 50p form here.
Historically, Laura Ashley shares also perform well between July and October each year, with average gains between 2008 and 2104 being 37%, assuming perfect timing of troughs and tops in each year. This would suggest a rise in share price to 37p.
It seems Laura Ashley has weathered a particularly long storm but, like Lake Windermere, once the sun shines again, what a wonderful landscape opens up.
|Date||Company||Status||Mid Price||Target 1||Target 2||Target 3||Target 4|
|09/08/2015||Laura Ashley||Initial write up||£0.28||£0.3125||£0.34||£0.38||£0.427|
Note: I have personally been accumulating a holding in Laura Ashley at these levels.