The chain said just two months ago that it would manage to break even in the 12 months to the end of January.

But now it expects to fall �5m ($8m) into the red.

Part of the problem is that the company's stores achieved lower sales and lower profit margins than expected in January.

Closing shops

The store was one of the first to start its winter sale in the run-up to Christmas and the heavy discounts cut into its profits.

Sales of home furnishings increased, but sales of women's clothes fell.

European stores outside the UK have been a drag on the chain.

Laura Ashley has already closed shops in France and Germany and plans to franchise others on the Continent.

The group said it was now in advanced negotiations with a prospective franchisee for its stores in Germany, Switzerland and Austria.