French Connection sales down but business claims it's on track for return to profit

Sales at French Connection dropped by 2.4% in the six months to 31 July 2018 reflecting the reduction in the business's store portfolio and tough trading in the UK, but it says it is on track to return to profitability this year.

During the period the group achieved revenues of £58.1m versus £59.5m for the same period last year and said that an increase in wholesale revenue (up 6.2% at £30.8m) had been offset by the decline in retail revenue, which was down 10.5% at £27.3m.

Like for like sales in the UK and Europe were down 7% while licensing revenue had remained flat at £2.6m. Composite gross margin was down from 42.9% to 41.5% reflecting the increase in wholesale revenue.

Its underlying loss before tax was reduced by £400,000 to £5.5m but the £11.7m it gained from selling its Toast brand to Bestseller in April was eaten up by provisions for onerous retail leases and debt impairment.

Chairman and chief executive Stephen Marks said he was pleased with the business that progress that had been made in turning the business around in the past couple of years despite efforts being hampered by tough trading.

"There is no doubt that progress has not been helped by the trading conditions in which we operate in the UK, although we can take great confidence from the performance of the wholesale business and the stability of the licence income. 

"The order books we have provide a clear outlook for the second half of the year in wholesale although retail continues to be challenging. We remain on target to return the business to profitability this year and we will be doing everything we can to ensure that happens," he said.