Shares in Laura Ashley have dropped after the retailer said its financial results will be significantly below expectations.

The high street stalwart issued a statement to the market on Thursday warning that trading conditions had been "very demanding" during the third quarter.

The results for the year to June 30 are therefore now expected to be significantly below market expectations.

Shares in the group fell as much as 20% in Thursday trading, though recovered to close 3.57% lower at 2.7p

In February the brand revealed half-year figures that showed plummeting sales of its furniture, wiping out pre-tax profits to zero.

Although the group's fashion sales have shown positive momentum, it has suffered from a slowdown in high street footfall and a weaker market for big-ticket items like furniture.

In December the Press Association revealed that the chain, which had 156 UK stores by the end of last year, will cut around 40 more sites as part of an ongoing strategy to slim down the estate.

It comes after Andrew Khoo succeeded his father Khoo Kay Peng as chairman of Laura Ashley's owner last year, with a fresh vision for the brand which includes expansion in China and developing the hospitality segment of the business.