French Connection struggle after a challenging six months
A difficult six months have caused profits plunges for retailer French Connection on the UK and European high street.
A loss of £6.3m before tax was incurred by the company, which showed a significant drop from profits of £0.7m last year.
The company’s chairman and chief executive, Stephen Marks, commented: “The last six months have continued to be very difficult for French Connection’s UK/Europe retail business which has had an impact on the Group results for the period.
He said a review of the retail business resulted in cross-divisional improvements which had to be implemented.
These changes hope to improve performance in retail and the business more generally, although the firm said unprofitable stores would close in the near future.
Mr Marks continued: “We are confident that these actions will produce a growing positive impact on our trading performance over the next two financial years.”
Revenue dropped 7% like-for-like in the last six months, while gross margins were squeezed by this summer’s intense discounting to be 2.3% lower than the same period in 2011.
French Connection said its e-commerce platform performed strongly with significant growth, and while wholesale revenue fell 11% like-for-like, this was balanced by a 28% increase in North America in the same division.
The group held £21.2m net cash at the end of July 2012, which is a drop from last year, and the company said it did not expect any improvements for the second half of the year.
Mr Marks concluded: “We recognise that the route to sustained recovery is likely to take some time, however we are committed to building on French Connection’s core strengths; our highly recognised and well-regarded brand, our long history of producing desirable, fashion forward products, our proven sourcing ability and the commitment and passion of our staff.”
This was posted in Bdaily's Members' News section by Miranda Dobson .
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