French Connection looks at strategy as losses grow

Although like-for-like sales advanced 2% in the fashion group’s  core UK business in the six months to July 31, the weakness of sterling, discounting in North America and tough trading in Japan all took a toll on performance. Wholesale was also difficult as buyers reduced budgets.

Chairman and chief executive Stephen Marks said the review is focused on “international activities, loss-making business segments and central overheads”, and has already led to a cut in head office jobs and shop closures in Denmark and Sweden. “It is our intention to implement further measures over the next six months,” he said.

The retailer reported a 4% increase in turnover to £116.9m in the period, but the weakness of sterling brought gross margin down to 50.8% compared with 51.8% for the comparable six months last year.

Marks said: “Looking to the second half, we are aiming to achieve a small improvement on last year’s operating result from our current operations while also making the strategic changes necessary to stem the recent losses.”