French Connection has reported reduced first-half losses and extended its strategic review and formal sale process for a second time, until the end of the financial year.

The fashion retailer posted an underlying loss before tax of £5.3m in the period to July 31, a 3.6% improvement on the comparable period last year.

Group sales fell 12.2% to £51m. Retail revenues were down 12.8% to £23.8m but like-for-likes advanced 1.4% as space was reduced. Wholesale revenues were down 11.7% to £27.2m.

Chairman, chief executive and founder Stephen Marks said progress was being made in turning around French Connection and expected to meet full-year expectations despite tough trading conditions.

Marks said: “I am pleased that the changes we have made to the business over the last few years continue to move us forward.

“There is no doubt that progress has not been helped by the trading conditions in which we operate in the UK, although our retail performance has been resilient, overall the wholesale business is strong and we continue to see good stability in the licence income.

“The order books we have provide a clear outlook for the second half of the year in wholesale but it appears that retail conditions will continue to be challenging. Underpinned by these results we remain fully on track to achieve our expectations for the financial year.”

French Connection reduced its average UK and Europe retail space by 8.2% to 151,000 sq ft and cut the number of operated stores and concessions from 103 to 90.

The retailer reprted that wholesale growth as being driven by ”customers in UK/Europe who have significant online businesses as well as with the department stores in the USA. 

Licence income, up 3.8% in the period, reflected ”a strong performance again” from furniture partner DFS, and ”some new licences but this was partially offset by reduced income from fragrance”.

The sale process was lengthened for a second time. The retailer said: “Discussions are still ongoing with a number of parties. We believe that further time is required to bring the process to a successful conclusion and expect the process to be concluded by the end of our current financial year.”

Sports Direct tycoon Mike Ashley holds a 27% stake in French Connection.

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