French Connection expects cash resources to be "eroded" without more funding
A UK high street retailer has reported that without additional funding it expects its cash resources to be “eroded”.
French Connection, headquartered in London, announced today that accessing government funding has been “challenging” and that so far, it has only succeeded in securing funding for the Job Retention Scheme for colleagues and rates relief for the store portfolio.
In today’s statement, the company said that if trading conditions stay as they are and it is unable to access further funding, its cash sources will deplete over the coming months.
It said that as part of its cost-saving measures, it will be asking its factories to produce reduce quantities of stock to match the expected lower demand.
However, the company also reported that its online sales were up 44 per cent over the last 6 weeks, and that it is continuing to supply a few of the predominantly online wholesale customers who are still trading.
French Connection said: “In the light of the company’s current cash position and the continued expected weak trading environment, we have been in active discussions with a number of potential funding partners.
“The board is confident of raising sufficient funds to support the business until the return of trading levels that are able to support the ongoing operations.
“This process is proceeding well and we are making good progress on due diligence and agreeing terms.
“Without securing additional funding and should the current COVID impacted trading levels continue, the company’s cash resources will eventually be eroded in the coming months.
“We have been developing plans for when the stores reopen to ensure they do so safely and in line with all government guidance, so that our customers and colleagues will be able to shop and work confidently in a safe and healthy environment.
“Given the UK Government’s recent update regarding the potential phased reopening of stores from 1 June, we are planning to open up in an orderly manner to ensure everything required is in place.
“We look forward to returning to more normal levels of trade as the situation evolves, although we do not expect this for some time to come.”
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