French Connection narrowed its losses by £3.1m to post an operating loss of £0.6m in the year ending 31 January 2018, during which chairman and chief executive Stephen Marks said the business had made “significant progress” with its turnaround plan.
Group revenues at the fashion retailer were up 0.5% to £154m, while like-for-like sales in the UK and Europe were up 0.8%. Wholesale turned in a strong performance with sales up 8.6%. Ecommerce revenue grew by 3.1% and now represents 29.7% of retail revenue.
During the year French Connection closed 11 “non-contributing locations” but it did open a new retail concept in Manchester. Further store closures are planned during the new financial year with one store already having been closed and a further five identified.
Marks said that this “significant progress” meant that the group entered a new financial year with “renewed confidence” despite a continued tough trading environment. “Our goal has been to return the Group to profitability and I believe we are very close to achieving that aim, given the momentum that we are currently seeing within the business,” Marks said.
“While it is clear that the retail market in which we are operating in the UK is unlikely to improve in the near future, we have clear visibility on the benefits we will obtain from the ongoing portfolio rationalisation.
“In addition the reaction to our collections and strength of our wholesale orders both for the spring and winter seasons further underpins the performance going forward. Although we are only early into the year, I believe we are in a very strong position to make significant progress again,” he added.
Marks had been under considerable pressure from activist shareholders Gatemore Capital Management and OTK Holding to ramp up his restructuring of the business after it posted its ninth consecutive year of losses last year. However Gatemore and OTK threw in the towel last summer and offloaded their shares, which were snapped up by Mike Ashley’s Sports Direct. Sports Direct had already acquired a chunk of shares when institutional investor Schroders offloaded their stake and it now holds more than 27% of French Connection’s shares.