ANALYSIS: Can French Connection turn it around?

French Connection FCUK
FCUK campaign was revived this year

French Connection has come under pressure by one of its major investors Gatemore Capital Management in recent days to ditch the FCUK logo, which it says is “no longer aspirational” and a contributor to the brand’s disappointing performance recently.

It’s interesting this should be picked upon as an issue by the investor since French Connection had come to the same conclusion almost a decade ago and dropped the cheeky contraction of its name, as it went from being cool and edgy to frankly a bit tiresome.

French Connection FCUK
The revived FCUK T-shirt

 

FCUK revival

It was, however, revived this summer as a wave of 90s nostalgia washed over fashion and French Connection revisited some its key pieces from the decade, including the sparkly slip dress (pictured above) very similar to the one made famous having being worn by “Diane” in seminal 90s film Trainspotting.

Styled over a white T-shirt (of course, as that’s how it was done in the 90s), the dress was a central character in French Connection’s spring campaign and the old FCUK T-shirts were revived for a new generation who were too young (or indeed perhaps hadn’t been born) the first time they were deemed to be cutting edge.

The FCUK concept was dreamt up by bad boy of advertising Trevor Beattie back in 1997. Beattie is said to have scribbled the legend down on a napkin having spotted a fax that was being sent from the brand’s UK headquarters, which was headed “From: FCUK”.

The logo then appeared on clothing and on billboards, with the most memorable bearing the “FCUK Fashion” line. The potential for it to be misread was clearly the whole point of the campaign.

French Connection
FCUK Fashion ad from the 90s

For a while consumers lapped it up and the brand soared to great heights, but as with all things, dare we say it, gimmicky, they eventually run out of stream and by the mid-2000s the public had tired of the joke and it was canned. Trouble is they had also tired of the brand in general.

Increasing competition

To be fair it wasn’t just the FCUK brand that was the problem and it wasn’t necessarily the clothes itself that were the problem either. But by the mid-2000s French Connection found itself in a sandwich between much faster, cheaper, on-trend fashion from the likes of Zara at one end and increasing competition from more premium brands such as Ted Baker and Reiss at the other.

It has been trying to sort out the issue by reducing discounting (for a while it seemed that its strategy to deal with cheaper, faster rivals was a perpetual sale) and closing loss-making stores – it recently vacated a prime slot at the Oxford Circus end of Regent Street – but Gatemore is still not happy. And you can understand why; in the year to 31 January losses increased by fivefold to £4.7m and revenue fell 9% to £164.2m. Furthermore, shares are now trading at around 40p whereas a decade ago they were more like £2.41.

The investor is also calling upon founder of the chain Stephen Marks to give up his joint role of chairman and CEO. (This isn’t anything personal against Marks; the City hates these joint roles where too much power is concentrated into one individual as they don’t exemplify good corporate governance, as set out in the Cadbury Code of 1992. Burberry’s Christopher Bailey, for instance, just gave up the CEO part of his joint chief creative and chief executive role. However, he has invented the role of president and taken that instead which, some analysts were not thrilled by. Again, nothing personal, just not considered good practice.)

Boardroom shake-up?

Whether Marks listens or not is another matter. He is famously protective of the brand, which he founded in 1971 and in which he still owns a 42% stake. He is also under pressure to drop two non-executive directors who have been around for nine years Dean Murray (former CEO of Myriad Childrenswear Group) and Claire Kent (a former managing director of Morgan Stanley).

It’s something for Marks and his team to argue with their investors as to whether these two are past their useful life at French Connection, but Marks has made one very interesting appointment to his non-executive team this year, which should instill some confidence in the brand’s future.

Christos Angelides
Christos Angelides joined as non exec in April

Christos Angelides joined the French Connection non-executive board in April. Angelides was previously a lifer at Next and is largely considered to be the driving force behind that brand’s commercial success. It was so dependably successful while Angelides was director of product (which he was for 14 years) that great results were met with no surprise or fanfare when they arrived. Interestingly since he was lured away by Abercrombie & Fitch for the president’s role at the end of 2014, Next has had a wobble and is expected to announce a further sales drop on Wednesday when it reports its next set of numbers (impossible to say whether things would be different had Angelides stayed of course, as frankly Next is far from the only brand to have endured tough trading lately).

The A&F role didn’t work out for Angelides and he left after a year but you can write that off as a blip. Angelides knows his product and will have some very valuable advice and experience to bring to the group. If he is allowed, and has the time in a non-executive capacity, to bring some influence to bear at French Connection, the future may not be so FCUK-ed as Gatemore thinks it is.