Fashion retailer French Connection sank deeper into the red yesterday after a poor sales performance over the spring extended into the following months.
Shares fell 6% as the group reported a pre-tax loss of £7.9m (€10.9m) for the six months to the end of July, compared to a loss of £3.9m in the same period a year ago.
The group had admitted in April that it was struggling. It shut six stores during the six-month period and plans three or four more closures during the second half.
Total revenues were down 9.8% to £75.8m while like-for-like store sales in the UK and Europe slumped by 10.7%.
Founder Stephen Marks, who is chairman and chief executive, said the disappointing performance of its spring collection “continued throughout the season”. Poor sales had “delayed our return to profitability”.
He added: “As anticipated in our April trading update it has been a tough trading period for us and we have responded accordingly to ensure we deliver improvements going forwards.”
Mr Marks said the group had made “operational and personnel changes to drive improvements in performance, notably in both design and merchandising”.
He said improved recent trading in recent weeks of its winter collection together with tight control of costs were among “positive signs”.
Like-for-like sales in the UK and Europe over the first six weeks of the second half had been flat — at a time when the wider retail sector has been struggling — while full-price like-for-like sales were up 6%, driving up profit margins.
Mr Marks said: “We are pleased with the recent change of trajectory in UK/Europe retail performance, particularly given soft trading on the high street in August. Trading, however is unpredictable, and we are as ever dependent on the Christmas selling period.”
French Connection operates 128 stores in the UK and Europe and 14 in North America together with 258 licensed and franchised units worldwide.
Cantor Fitzgerald analyst Freddie George said the results were “worse than expected but perhaps not as bad as some feared after the profit warning in April”. He said the company was not expected to break even for another couple of years.
“Management needs to concentrate on the profitable parts of the business, set in place a strategy to increase underlying gross margins, accelerate the store closure programme and reduce costs.
“There is nothing in the statement to say there is any urgency to change strategy.”
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