British retail chain Laura Ashley, best known for its floral fabrics and designs, is to close 35 more stores on the continent as it attempts to cut losses.

The company is pulling out of Germany altogether.

Laura Ashley said it would take an exceptional charge of £7.7m ($12.5m) to cover the costs.

The retail chain, which earlier this month issued a profit warning following disappointing sales over Christmas, also said it would raise £9m through a rights issue at about 8p per share.

Profit warning

The furniture and clothing store said it is on the lookout for franchise partners for its remaining 18 European shops, which remain profitable.

"Whilst closing any stores is always a difficult decision, we do believe that by closing all our loss making stores in continental Europe and exiting Germany, this will place the company on a firmer footing for its further development," said Laura Ashley's chief executive officer KC Ng.

Laura Ashley issued a profit warning on 8 January, saying it would miss full-year profit forecasts due to poor Christmas trading.

It told investors it would be happy to just break-even.

Until the warning, analysts had been expecting full-year profits, before tax and exceptional costs, of about £6m.

The fashion, fabrics and furniture group was forced to drastically cut prices, particularly in Europe, in the 23 weeks up to 4 January.

Trading conditions in Germany and France proved particularly tough.