French Connection reports £3.7m loss on sales down 6.7%

French Connection has posted losses of £3.7m (compared to a loss of £4.7m in the previous year) for the year ending 31 January on revenue down 6.7% at £153.2m but the group said it had seen some trading improvement in trading performance.

Like-for-like retail sales in the UK/Europe rose by 4.4% and online sales were up by 12.7% and now represent 27.3% (2016: 23%) of retail revenue. Overall retail revenue was down 4.9% at £87.9m (2016: £92.4m) on an average space reduction of 11.7%, while wholesale was down 9.1% (2016: down 4.5%).

Chairman and chief executive Stephen Marks said the business had experienced strong demand for its SS17 range in the first six weeks of the new financial year and that its performance had improved in the second half of last year.

"We have seen an improvement in performance over the financial year with continued good progress in the UK/Europe retail business, but as previously reported, this has been partly held back by the wholesale and licensing divisions, particularly in the first half of the year," Marks said.

"The noticeable improvement we have seen during the second half and into the new financial year leads me to believe that we are moving in the right direction. The reaction to this year's collections has been very strong so far with sales both in our stores and wholesale customers up on last year," he added.

Nonetheless Marks is under pressure from activist shareholder Gatemore Capital Management to take further action at the retailer, which has struggled since its 1990s heyday to keep up with fast fashion rivals such as Zara, H&M and ASOS and more premium brands at the top end of its price range like Ted Baker.

Gatemore has also repeatedly called upon Marks, who founded the business in 1972 and who owns a 42% stake, to split his role of chairman and chief executive as it contravenes corporate guidelines. It also wants to see a shake-up of its boardroom as two non-executive directors have reached the nine-year service milestone (at which point they cease to be classified as "independent") and the business needs to replace Christos Angelides who joined the board last year but was obliged to stand down last month when he was appointed CEO of rival Reiss.