The founder of high street chain French Connection today defended the retailer against criticism that he holds too much power at the company.
Chairman and chief executive Stephen Marks, who has a 42% stake in the firm, has come under fire for breaching corporate governance best practice by having no remuneration committee and just one non-executive director. Guidelines also recommend firms split the roles of chairman and chief executive.
Mr Marks said: “I don’t actually think our structure is something that’s a problem for anybody. If I saw it as a problem, I would do something about it.”
All resolutions were passed at the company’s annual meeting despite criticism from investor groups.
Research Recommendations Electronic Voting, a venture including the National Association of Pension Funds, said the company did not comply with many corporate governance recommendations.
It said: “We believe that Stephen Marks has unfettered powers of decision and therefore his role calls into question whether the board can oversee and evaluate the performance of senior officers and the company.”
No questions were raised by the handful of shareholders present today. The company did not give information on the number of shareholders voting for and against each resolution.
French Connection said in March that like-for-like sales had slumped 17% in the first five weeks of its financial year and admitted ranges had not been in tune with the demands of fashion-savvy shoppers.
Mr Marks told today’s meeting that improvements to ranges had been well-received and were having a positive impact on sales.
He said there had been a “marked improvement” since the start of the year but added: “It is unfortunate that the difficult conditions in the high street have prevented the improvement being as rapid as we were looking for.”
Wholesale customers were happier with the firm’s products, but repeat orders were slower than normal because of the challenging high street conditions.
Mr Marks was confident French Connection’s performance would continue to improve and remained hopeful the company would return to growth this financial year. In the year to December 31, profits fell to £33m (€48.4m) from £38.7m (€56.7m).
He dismissed speculation that the group had been speaking with private equity firm Baugur about a possible bid for French Connection.
Analyst Richard Ratner at stockbroker Seymour Pierce said the first half of the year was likely to be “pretty grim” but that there should be a bounce back in the second half.
“French Connection is an area of aspirational fashion which is still doing relatively well,” he said.
Shares were 5% higher today, up 12.25p to 260p.