French Connection revenue drops as COVID-19 closures impact high street sales

High street retailer French Connection saw its group revenue fall by 40.4% for the financial year ending 31 January 2021, as COVID-19 imposed store closures heavily impacted trading.

The retailer reported an underlying loss of £11.7 million, driven by the significant decline in sales, additional one-off stock provisions, partially offset by cost reductions across all areas including rent re-negotiations with landlords, business rates relief, use of the furlough scheme and headcount reductions

Wholesale revenues were £49 million, down £24.2 million (33.1%) from 2020, with customers particularly impacted during the first national lockdown. The company did however announce that online sales performed strongly in second half.

Retail revenues were £22.5 million, down 51.8% (£46.7 million), due to the store closures during the three national lockdowns and footfall being impacted by restrictions at other times, although within this, online sales were up 7.1% driven by Homeware and casual clothing.

Commenting on the results, Stephen Marks, Chairman and Chief Executive said: "Our key focus for the year has been to navigate our way through the difficult challenges we have faced as a result of the COVID-19 pandemic.

"Initially we worked with our key stakeholders to stabilise the business and secure new financing. Trading had been broadly in line with our expectations at the time of the financing but we were then hit by the second and third national lockdowns in the UK. Given the new financing, together with the actions being taken to optimise sales, tightly manage costs and preserve cash, we are confident that the Group is well positioned to navigate any further period of uncertain consumer demand.

"Looking ahead I am pleased that the wholesale business in both the UK and USA has bounced back for the Summer and Winter seasons, even with the continued uncertainty and lockdowns. E-commerce sales are growing with the Summer collection selling very well.

"With stores having predominantly re-opened in the UK, we are seeing a much better sales performance than we experienced at the end of the first national lockdown although it will take time to see how quickly things develop over the coming months, in our own stores but also for our wholesale customers. Overall though I feel that we are definitely moving in the right direction once again."

Last month, French Connection announced it is launching another formal sale process after receiving takeover interest, but told investors one suitor whose interest was revealed last month would not be making an offer.