Shares in fashion retailer French Connection soared yesterday after it said profits would be higher than its previous expectations despite the tough conditions on the high street.
The company said pre-tax profits will be at least 6.8m in the year to January 31, which is comfortably ahead of City forecasts and previous guidance from French that profits would be between 2.6m and 5.1m.
The profits surge is due to wholesale outlets and licensing, while its own stores, which account for about 55 per cent of revenues, have performed in line with previous guidance in November, when sales were down by almost eight per cent.
The group posted bottom-line losses of 24.9m in the previous year but restructured the business by taking measures including the sale of the loss-making Nicole Farhi brand and the closure of its Japanese business and some stores in North America and Europe. The shake-up left French Connection with its UK and European retail and wholesale operations, the Great Plains wholesale-only ladieswear range and Toast, its mail-order fashion and homewares brand.
Shares rose 22 per cent yesterday as analysts upgraded their forecasts for this year and next.
Chief operating officer Neil Williams said: "We are very happy with the restructuring we have done and that will allow us to concentrate on our core business. It's too early to say how 2011 will go but we feel that if we can produce some really good product there will be demand for it."
French has also benefited from lucrative licensing deals, including a 6.2m deal with Hong Kong-based exporter Li & Fung.