The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
LONDON, United Kingdom — British fashion retailer French Connection Group Plc reported a drop in profit for the half-year due to the closure of some of its stores.
The owner of the Toast, French Connection and Great Plains brands has been struggling to fend off competition from fast-fashion rivals such as ASOS, Forever 21 and Inditex's Zara. It has closed stores and hired new management and design teams as it tries to return to a profit.
In March activist investor Gatemore Capital urged the loss-making company to split itself or spin off its Toast brand, among other options. It offloaded its entire stake in July, saying it was not satisfied with the pace of change at the 45-year old retailer.
British billionaire Mike Ashley's Sports Direct International took an 11.2 percent stake in French Connection in February, becoming its second-largest shareholder. Sports Direct's intentions were not clear.
ADVERTISEMENT
French Connection said gross profit for the six months to July 31 fell to £31.1 million ($41.9 million) from £38.1 million ($54.4 million) a year ago.
Revenue came in at £68.1 million ($91.9 million), down from £69.2 million ($93.4 million) year ago.
French Connection, which has more than 409 outlets, said it closed seven stores over the last 12 months, reducing its trading space by 10.2 percent.
Sales at stores open for more than a year in the UK and Europe were "broadly flat", it said on Tuesday.
However, revenue at its wholesale operation rose 7.2 percent to £29.6 million ($39.9 million), with the business returning to growth in UK, Europe and North America.
"We have definitely seen momentum build in the first half of the new financial year with improvements across all the divisions despite difficult trading conditions," its chairman and chief executive Stephen Marks said, admitting that there is a lot to do before company returns to profitability.
French Connection posted its fifth annual loss in a row in March.
To boost profitability, the company said it would cherry-pick locations for new store openings, with one store scheduled to open in November in Manchester.
ADVERTISEMENT
French Connection's current position is a far cry from the heady days of 2004 when the huge success of its FCUK brand boosted the company's shares to more than 500 pence. The stock has plummeted since and was trading 2.3 percent lower at 43.3 percent by 0735 GMT.
By Rahul B in Bengaluru; Editor: Louise Heavens
Designer brands including Gucci and Anya Hindmarch have been left millions of pounds out of pocket and some customers will not get refunds after the online fashion site collapsed owing more than £210m last month.
Antitrust enforcers said Tapestry’s acquisition of Capri would raise prices on handbags and accessories in the affordable luxury sector, harming consumers.
As a push to maximise sales of its popular Samba model starts to weigh on its desirability, the German sportswear giant is betting on other retro sneaker styles to tap surging demand for the 1980s ‘Terrace’ look. But fashion cycles come and go, cautions Andrea Felsted.
The rental platform saw its stock soar last week after predicting it would hit a key profitability metric this year. A new marketing push and more robust inventory are the key to unlocking elusive growth, CEO Jenn Hyman tells BoF.