French Connection narrows first half losses
Fashion retailer French Connection saw its losses narrow in the first half of its financial year as turnaround measures helped drive an improved performance.
Group loss before taxation was £3.9 million in the six months to 31 July compared to £6.1 million in the same period last year.
Revenue fell by 6.6% to £84 million primarily due to the closure of non-contributing stores.
The results mean that the retailer’s financial performance has improved in three consecutive half-year periods.
French Connection chairman and chief executive Stephen Marks said: “I’m pleased to report a further positive step forward as we rebuild value in our business. The initiatives we put in place to drive a turnaround in our trading continue to deliver an improvement in performance. Whilst costs will continue to be managed tightly, we are cautiously investing in growth opportunities, trialling new store formats and developing our international business.”
Group retail revenues of £49.9 million were 10.6% lower than the prior year due to the planned closure of non-contributing stores as part of a store estate rationalisation programme.
French Connection said it had significantly reduced discounting and promotional activity in the UK and Europe in line with its strategy to drive higher full price sales. This meant that there was no mid-season sale and the summer sale was put back by a week with lower levels of mark-down were used.
After adjusting for the changed discounting and promotional activity, underlying UK/Europe like-for-like sales increased by 6% or by 1.1% on a reported basis.
Four non-contributing stores were closed in the period: two in both the UK/Europe and North American divisions. The retailer expects to close a further three to four stores in the second half.
The underlying retail operating loss of £7.5 million was an improvement of £1 million on the prior year. This was driven by better like-for-like sales in the UK and Europe, improved margins and the closure of non-contributing stores. However, the improvement was partly offset by a weaker performance in the retailer’s North American business.
Group wholesale revenues of £34.1 million were in line with the previous year.
Marks added: “It’s particularly encouraging to see the positive momentum continuing to be reflected in the wholesale forward order book where Winter 14 is up on last year and initial Spring 15 orders are strong.
“Given the very competitive market place and tougher like-for-like comparatives in the period, we remain cautious about the second half where, as ever, we are dependent on the very important Christmas trading period. We expect the results for the full year to be in line with market expectations, setting the group up for further progress as our initiatives continue to gain traction.”
