French connection reports steady sales

Retail chain French Connection today said UK sales held firm after its womenswear business showed “good growth” on a year earlier.

While the firm believed its brand performed well in the past 15 weeks, it remained cautious over the full-year outlook as the retail sector’s troubles showed no sign of easing and menswear also remained under pressure.

The group has overhauled in-store service and presentation, while restructuring its menswear design teams to help revive sales. It is under pressure to improve its performance after pre-tax profits fell 22% to £3.1m (€3.8m) in 2007.

At the company’s annual meeting, French Connection said like-for-like retail sales remained broadly flat across the UK and Europe over the past three-and-a-half months in spite of “particularly difficult” trading conditions.

Ladieswear and its mail order Toast brand benefited from a sales turnaround, with blouses, skirts and dresses selling well, according to the firm.

However, French Connection said its UK and Europe wholesale division, which had been showing signs of improvement, was seeing “limited” year-on-year growth in deliveries of its spring/summer 2008 range amid the tough trading, although autumn/winter 2008 orders are broadly in-line with last year, it added.

Its US business showed a drop in profit margins in the 15 weeks to May 17 as the group continued to discount to tempt cash-strapped shoppers, but its wholesale business in America enjoyed sales that were “well ahead” of last year.

Shares in the group dipped nearly 2% on French Connection’s full-year caution.

The group said: “Looking forward, the challenging economic conditions which are affecting the retail markets in both the UK and the US appear to be continuing and in particular affecting menswear.

“We therefore maintain our cautious outlook for the rest of the year, despite the encouraging performance of the French Connection ladieswear ranges.”

French Connection, which also owns the Nicole Farhi fashion brand, has around 164 stores and concessions, with a further 170 licensed and franchised French Connection stores across the world.