Third profits warning for struggling French Connection

Struggling fashion chain French Connection issued a third profits warning in 18 months today as it conceded its controversial lesbian kiss advertising campaign had failed to win over shoppers.

Struggling fashion chain French Connection issued a third profits warning in 18 months today as it conceded its controversial lesbian kiss advertising campaign had failed to win over shoppers.

The retailer said like-for-like sales at its stores in the UK and Europe were down 2% since the end of January, while trading over Easter was difficult and below expectations.

Chairman and chief executive Stephen Marks said there was “little indication” that market conditions or trading would improve later this year and said the company was “materially reducing” its expectations for the year.

The first quarter slump came despite a major advertising blitz which showed two well-dressed women kung fu fighting in a basement before they kissed.

Launched under the logo “Fashion versus Style” in February, the campaign drew more than 100 complaints from viewers and was referred to the Advertising Standards Authority.

French Connection operations director Neil Williams today said the adverts had not been as successful as the company had hoped.

Mr Williams said: “People saw the adverts and some people didn’t like them but most people did. Overall, we thought we got a good reaction to it.

“Was it what we were looking for? Maybe not because the figures weren’t what we wanted them to be.”

The company said that orders for its summer ranges were subdued in its wholesale business in the UK and Europe, while bookings for the winter collection were 12% below last year.

In North America, sales via its wholesale business were running ahead of a year earlier, but it was struggling to tempt shoppers to buy clothes in its stores.

Shares in French Connection fell 4% today as analysts downgraded profits forecasts for the year.

Retail expert Richard Ratner, of Seymour Pierce, reduced his forecast from £13m to £4m, while Investec Securities analyst Matthew McEachran cut his from £12.2m to £5m.

Mr Ratner said the update was “effectively another profits warning” and added: “Whilst this is not good news, the brand is far from defunct, but any recovery will be relatively slow.”

And Mr McEachran said it was “yet another disappointing performance” but said it was more to do with tough market conditions on the high street than French Connection itself.

“Our own view is that a bigger proportion of the underperformance than last year now relates to market conditions rather than its own problems,” he said.

Last year, pre-tax profits fell 53% to £15.7m amid declining sales and criticism that its clothes were overpriced and unoriginal.

Mr Williams said it would be a long process to turn the company around.

“Easter wasn’t what we hoped it would be and the market conditions were tough and have not improved,” he said.

“We are swimming against the tide. In order to get it going again, we need to convince people that we have a great product in the stores and get people back into the stores which is not a quick process.

“It is going to take time for that to happen and it isn’t helped by the fact that trading on the high street isn’t particularly good.”

French Connection has used controversial advertising campaigns for years, although it dropped its FCUK logo from many of its ranges last year after shoppers grew tired of the joke.

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