Laura Ashley , the British retailer famed for its floral fabrics, said on Thursday it returned to profit and enjoyed strong sales in the first half of the year thanks to further cost cuts and strong demand.

Shares in the fashion and fabrics chain rallied on the news as well as a prediction by Laura Ashley that earnings would continue to rise going forward. Its shares were up 6.38 percent at 25 pence by 0905 GMT.

Pretax profit came to 3.0 million pounds in the six months to July 29 from a loss of 0.2 million over the same period a year ago, the high street retailer said.

Like for like UK sales rose 13.1 percent in the 31 weeks to September 2, having jumped 14.3 percent in the first 24 weeks to July 15 against a weak performance a year ago.

Despite challenging retail conditions in the UK, we believe that our recovery will continue, underpinned by solid operational efficiency throughout the business, Chief Executive Lillian Tan said in a statement.

There was tough price competition in the furniture and fashion business, she told Reuters in a telephone interview.

(But) we believe despite these challenging retail conditions ... our product offer remains resilient. Tan said.

NEW SHOPS PLANNED

The chief executive said she may open as many as 15 to 20 new stores over the next 12 months as part of the ongoing shake up of Laura Ashley's portfolio.

The expansion is not a net figure as there will also probably be store relocations or closures. Laura Ashley currently has 178 stores in Britain. It shut eight shops and opened six during the first half of the year.

The company, which makes clothes, furniture and home accessories, said it was boosting efficiency by sourcing more products from Asia and Eastern Europe.

In addition, popular clothes designs, such as the Tropical Hibiscus print, kept the cash registers ringing, with UK fashion sales up 45.5 percent like on like in the first half.

As well as its trademark women's clothing, Laura Ashley is also offering tailored outfits and office attire this season in a bid to attract more customers, said Tan.

Ramona Tipnis, an analyst at brokers Numis, applauded the company's return to the black, saying the figures were better than had been expected.

But she added: We are remaining fairly cautious because we want to make sure this recovery is not just a blip and it is there to stay.

United kingdom