Better by design for Connection

The loss-making group said revenues in its UK and Europe business were 2.1 per cent higher on a like-for-like basis over the last 16 weeks.

It has been encouraged by the consumer reaction to its autumn range, which is the first season collection from the design team.

Operational improvements are also having a “growing impact” as the company looks to recover from losses of £16m in its UK and Europe retail arm in the year to January 31.

Shares were 4 per cent higher yesterday as analysts welcomed the turnaround signs, particularly as other retailers have complained that weather factors caused a slow start to the winter season.

The company has 74 stores in the UK and Europe, as well as licensed and wholesale operations around the world, including Hong Kong and China.

Founder and chief executive Stephen Marks recently called conditions in the sector as the worst he has known in 40 years of trading.

Freddie George, a retail analyst at Cantor Fitzgerald, continues to expect a full-year loss of £6m for the current year to January and does not expect the company to break-even until 2015 at the earliest.

However, he said management efforts were beginning to pay off: “From recent visits to the stores we believe there is a better mix of assortment and prices have been sharpened up, particularly in womenswear.”

Numis analyst Andrew Wade added: “We retain our positive stance.”