French Connection losses before tax narrow to £6.1m

The fashion retailer has narrowed its year-on-year losses by £200,000 from losses of £6.3m in the same period last year.

In addition it has cut losses across the UK and European business by £1m.

But revenue across the business slumped 6.4% to £89.9m in the period, which the retailer said “reflected a softening in our wholesale business and a reduction in the UK and Europe business”.

Meanwhile like-for-like sales across the UK and Europe business dropped 4.5%. French Connection said this was in part due to the retailer pushing back the start of its summer Sale.

It revealed its cash position has improved to £22.3m from £21.2m last year and it has no debt, while it has significantly reduced stock levels.

French Connection chairman and chief executive Stephen Marks said the new team, which has been in place for almost a year, has helped improve margins, ranges and “retail disciplines” across the UK business.   

Marks said: “Although it is early days in our turnaround, the underlying strength of the business and the significant global awareness of the brand, coupled with the changes we are making, provide the foundations for continued improvement and give me confidence for the future.”

He added that the reaction to the recently launched winter collections has been “encouraging”. Meanwhile, he said the improvement to the wholesale order books shows “the changes we have made are starting to resonate with our customers”.

French Connection has been cutting costs out of the business and closed four stores in the period with a further three set for closure before Christmas.

In his chairman’s statement Marks added: “We will continue to consider further closures of non-contributing stores in the future when this is economically viable, but this effort is hindered by the current rental market in a number of the areas and other space available there due to closures by other businesses.”

Marks said the retailer’s online business “continues to grow strongly” and it has recently relaunched the website with improved functionality.

Marks added: “Looking forward, considerable progress has been made to turn around the fortunes of the group, although there is obviously still some way to go until we reach profitability. Performance in the UK has certainly not been helped by the overall market conditions which remain particularly volatile, but importantly we are on an improving trend.”

Overseas, French Connection said its rationalised store portfolio in North America led to “an improved contribution from the retail business”.

It also improved profitability across its joint ventures in Hong Kong and China but revenue across the Rest of the World wholesale arm declined due to a continuing weak performance of its Australian licence.