LONDON, United Kingdom — Clothing retailer French Connection reported a full-year loss on Tuesday, citing difficult trading conditions on UK’s high streets and said it would continue to hold back paying dividends this year.
The retailer, once known for its provocative FCUK brand of clothing and accessories, has struggled to differentiate itself from rivals such as Inditex’s Zara, which offers a greater variety of clothes at lower prices.
Along with other British retailers like Ted Baker and Superdry, French Connection has also faced subdued consumer demand brought on by political uncertainty related to Britain’s exit from the European Union, while brick-and-mortar retail is suffering from a shift to online shopping.
French Connection, whose brands include Great Plains and YMC as well as its eponymous label, posted an underlying loss of £2.9 million ($3.79 million) for the year ended January 31, compared with a profit of £0.8 million a year earlier. “Performance during the second half has been considerably worse than expected, particularly during the fourth quarter in the UK,” Chief Executive Stephen Marks said in a statement, citing lower in-season orders being received and wholesale deliveries being shifted into the new year.
Like-for-like sales in its United Kingdom-Europe business ended down 2.5 percent for the year, due to intense competition on UK’s high streets — Regent Street and Oxford Street — in the second half of the year, a sharp reversal from the 1.4 percent rise it had seen in the first half.
“We believe the trading landscape in the UK is unlikely to improve in the short term and this has a potential impact on both the retail and wholesale businesses,” Marks said.
Total group revenue fell 11.4 percent to £119.9 million, with wholesale revenue down nearly 5 percent. Revenue was hurt in part due to the company’s decision to close 11 stores, three outlets and four concession stores.
The company also said it was reviewing coronavirus’ impact on its supply chains for winter wear coming from East Asia and the further reductions in footfall it could see on UK high streets, but at the moment could not estimate its effect on its business.
The company’s stock has lost nearly 54 percent of its value so far this year.
By Siddharth Cavale and Tanishaa Nadkar; editor: Shailesh Kuber.