French Connection returns to underlying profitability but still has "a way to go"
French Connection has finally returned to underlying profitability after seven years of of losses; the mid-market fashion chain made an underlying operating profit of £0.1m in the 12 months to 31 January 2019.
Chairman and CEO Stephen Marks said that the business had a "way to go" before the business achieved "an appropriate level of profitability" but the move into the black at underlying operating level marked a breakthrough for the business which recorded a loss of -£2.1m for the same period in the prior year.
The £0.1m profit, however, excludes profit/loss on store disposals and closures, provisions for bad debts and onerous leases and other professional fees; when these were taken into account, the business reported an operating loss of £9.3m.
The results were achieved against a difficult trading backdrop which was evident in a -6.8% drop in like-for-like sales. Total group revenue edged up 0.2% to £135.3m while total retail revenue was down -10.6% to £58.4m. Wholesale performed strongly, up 10.3% to £76.9m.
The company said it was disappointed to report that total e-commerce revenue contracted by -3.7% across its websites with e-commerce now representing 21.2% of total sales (up from 19.8%).
During the period a further 10 non-contributing locations closed, with one new store and one concession opened leaving the chain with 96 operated stores and 195 franchised, licensed and JV stores and concessions.
“I am pleased to report that we have achieved our target of returning the Group to underlying profitability this financial year. This is only part of our overall journey, however it represents a significant achievement given the results over recent years.
"This has been achieved despite the ongoing difficult retail trading environment in the UK and is the result of the changes we have made in all areas of the business to adapt to the ever evolving markets in which we operate.
"While we still have a way to go to return the business to an appropriate level of profitability, I believe that we have made and continue to make significant progress," Marks said.