Clothing retailer French Connection crushed hopes of salvaging lost profits today after it was forced to extend its summer sale to shift surplus stock.
French Connection conceded it was unlikely to earn much more than £20m (€29.6m) this year – at the lower end of guidance given in July when the company warned on profits for the second time in eight months.
It follows a 9% drop in like-for-like sales in the UK and Europe during the six months to July 31 which reflected “missed opportunities within our collections,” the group said.
Profits for the period were also lower, down at £5.1m (€7.5m) against £16.2m (€24m) a year earlier.
French Connection has reacted by introducing new ranges mid-season in an effort to bring shoppers back, but a late pick-up in sales could not clear a glut of old stock.
As a result, the retailer was forced to delay the introduction of its winter ranges by staying on sale for longer – a move that put margins under fresh pressure.
But it flagged “encouraging signs” that its winter ranges were back in step with high street fashion in the UK and Europe where the company has 74 stores, 30 concessions and 29 franchises. That helped lift shares by 6%, following a sharp fall in recent months.
Meanwhile, problems have continued to stack up in its wholesale business where retail customers have been scared by the tough trading conditions and lack of interest from shoppers.
Orders for this winter and next summer are currently 15% below the levels seen last year, the group said.
Chief executive Stephen Marks said: “The business has faced a challenging six-month period during which the retail environment in the UK has continued to worsen.
“The in-season product which we added to our summer ranges had a positive impact on our trading but the level of sales achieved at both retail and wholesale was below our expectations.
“The recent signs of a positive response to the winter ranges are encouraging, however we now anticipate that the outcome for the year will be around the lower end of the expectations we described in July.”
Despite the disappointing performance, a spokesman for French Connection said there was no intention to ditch the “fcuk” brand which analysts believe has become tired in the eyes of customers.
Revenues for the period totalled £117.9m (€174.6m) – down from £128.2m (€190m) at the same stage of last year – despite the addition of 16% more trading space in the UK and Europe.