French Connection says recovery on track as it continues to reduce store estate
French Connection said its recovery was still on track as group sales dropped -12.2% on the back of continued store closures. Like-for-like retail sales, however, were up 1.2% against a tough trading backdrop.
In the six months to the end of July the mid-market fashion retailer achieved group sales of £51m (2018: £58.1m) with total retail sales of £23.8m, down from £27.3m in the same period last year. Losses were reduced from £5.5m to £5.3m, an improvement of 3.6%.
Wholesale revenue was down 11.7% at £27.2m, which chairman and CEO Stephen Marks said was down to phasing of orders, while licensing was up 3.8% at £2.8m.
During the period under review French Connection closed 13 company-operated stores and concessions, as well as 19 franchised and licensed outlets in the six months, and opened one new concept store in London, taking its total retail selling space down 8.9%. This left it operating from a total of 90 owned stores with 185 franchises.
Commenting on the results Marks said: "I am pleased that the changes we have made to the business over the last few years continue to move us forward.
There is no doubt that progress has not been helped by the trading conditions in which we operate in the UK, although our retail performance has been resilient, overall the wholesale business is strong and we continue to see good stability in the licence income. The order books we have provide a clear outlook for the second half of the year in wholesale but it appears that retail conditions will continue to be challenging. Underpinned by these results we remain fully on track to achieve our expectations for the financial year."
During the six months French Connection closed its flagship store on London's Oxford Street and opened the new French Connection Studios in Mayfair, which is a fashion and lifestyle concept store offering some exclusive product. It was conceived to demonstrate the new positioning of the brand.
Marks said of the store which opened in July: "The result so far has been encouraging, but it is still early days."
Within the retail division Marks commented that e-commerce sales had been slightly reduced, but added: "A new team is in place and progress has been made with the site particularly around personalisation of communication, with further customer experience enhancements to be rolled out during the second half of the year to drive engagement and conversion, together with an increased investment in digital marketing spend to drive traffic.
"We expect the impact of this to grow towards the later part of the second half of the year. As we further develop the site, the key focus is very much on the experience for mobile users and the activity generated through mobile continues to grow with visits at 63.6% up from 56.4% last year."
Following last year's announcement that the group was in talks with potential suitors, Marks said that discussions remained on-going with a number of parties and were expected to be concluded by the end of the financial year.
"We initially expected this strategic review (including the formal sale process) to conclude during the first half of 2019, but as announced on 28 June, given the active ongoing discussions, we extended this process to now. We believe that further time is required to bring the process to a successful conclusion and expect the process to be concluded by the end of our current financial year," he said.