Sale plan boosts UK retailer French Connection

Shares in UK clothing retailer French Connection have surged over 20% after it said the company could be sold as it reviews its options.

The statement follows a report that chief executive and chairman Stephen Marks, who founded the company in 1969 and remains the largest shareholder, had approached bidders to offload his stake.

Marks retains a 41.6% stake, while Mike Ashley’s Sports Direct International holds 27%. The company, whose brands include its namesake French Connection, Great Plains and YMC, has struggled to differentiate itself from rivals such as Inditex’s Zara, which offers a greater variety of clothes at cheaper prices.

French Connection sold goods from 328 branded locations as of the end of January — a mixture of its own stores, spaces in concessions and licensed and franchised premises. Once known for its provocative FCUK brand of clothes and accessories, the company has been in the red for six years.

In March, it said it was close to turning profitable, saying that it would consider restarting dividend payments when it did. Last year, the company came under pressure from activist investor Gatemore Capital Management to explore a sale, replace board members and split the role of the chief executive and chairman.

In a bid to narrow losses and move towards profitability, the company has pushed through a string of changes including closing stores.

It has also hired fresh talent in its management and design teams to compete with the likes of Ted Baker, Asos, Zara, and Top Shop.

The company’s stock price is a far cry from the heady days of 2004 when it traded at elevated levels. In April, the company agreed to sell its 75% stake in clothing brand Toast to Danish firm Bestseller United for €26.5m. Meanwhile, rival fashion chain H&M is acquiring a small stake in technology firm Klarna. It will pay about €17.3m for a stake of less than 1%, a Klarna spokeswoman said.

Klarna’s digital platform would be used across H&M will further integrate the fashion chain’s digital and physical stores, the two companies said in a joint statement. “We are impressed with what Klarna has achieved to date and now we will work together to elevate the modern shopping experience,” said H&M chief executive Karl-Johan Persson.

Klarna was founded in 2005. It has 2,000 employees. It is one of Europe’s so-called tech unicorns — a start-up with a valuation of more than €867m.

- Reuters

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