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French Connection feels the pain
Fashion chain French Connection said sales growth had slowed with the group's menswear lines still stuck in the doldrums.
Like-for-like sales growth in its UK and European business – accounting for more than half of overall revenues – slowed to 0.3 per cent between August and November 24, down from 1 per cent the previous year.
Its ladieswear and Toast mail order business saw stronger sales, but menswear performed "less well" despite a recent revamp of the range to boost sales.
French Connection has been hit by the recession, which compounded existing problems as the group attempted to lure back consumers tired of its FCUK brand.
Alongside the difficulties seen in menswear, the firm said its North American retail business had been hit by fierce competition for consumers in a "highly promotional" market, where like-for-like sales were 4.7 per cent lower during the period.
While the group's overall sales were 8 per cent ahead of last year this was largely due to currency effects from a weaker pound. The currency weakness is also squeezing margins as the more expensive dollar lifts product costs.
There was little cheer for investors elsewhere in the group's wholesaling arm, where revenues were 11 per cent below the previous year.
In September, French Connection said it had cut 50 head office jobs and closed its Northern European business after pre-tax losses widened to 12.8m in the six months to July 31 from 5.4m a year earlier.
Seymour Pierce analyst Kate Heseltine said: "Although we are encouraged by the measures taken so far, there is nothing in the statement that prompts us to adjust our forecasts or recommendation."
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Thursday 24 May 2012
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