French Connection Group (LON:FCCN) have seen their shares dip as the firm gave shareholders a disappointing update.
The fashion brand said that across the recently ended financial year their loss had narrowed but sales continued to slip.
The Chairman noted: “After making further progress during the first half of the year, the overall result for the financial year is disappointing. Performance during the second half has been considerably worse than expected, particularly during the fourth quarter in the UK, reflecting the continued difficult trading conditions and a shift in the phasing of wholesale deliveries to customers into the New Year.
Encouragingly however, the strong sales growth we have seen recently in the USA wholesale business continued, helped by another excellent sell through at the major department stores, although this was adversely impacted by the additional import duties imposed.
I am however, pleased with the continued good performance of the wholesale business in the USA and we have good forward order banks in the UK to be delivered during the first half of the year. Initial reaction to the winter ranges has been good.”
Across the annual period, which ended on January 31 – French Connection recorded revenue from continuing operations of £119.9 million – which sees a 11% slump from £135.3 million recorded a year ago.
French Connection managed to cut their loss from £8.6 million to £7.3 million on a better note – this was mainly due to operating expenses falling by 20% from £71.6 million to £57.2 million.
Total retail revenue dropped 20% to £46.7 million – whilst wholesale revenue also dipped 4.8% to £73.2 million.
Looking at the UK Europe – the fashion brand saw like for like sales fall 2.5% following tough market conditions.
French Connection noted that the British High Street was becoming tougher to operate within and that this had affected its’ results across the yearly period.
“The trading landscape in the UK is unlikely to improve in the short term and this has a potential impact on both the retail and wholesale businesses. Against this background we are working hard to ensure we are operating as efficiently and cost effectively as possible while working closely with all our trading partners to maximize business with them.
All our staff have worked hard over the year in testing conditions and for this I thank them. We have a lot to do to return the business to the positive progress we had been making prior to this year but I am confident we are well positioned to achieve this”.
Commenting on the results, Stephen Marks, Chairman and Chief Executive said:
“The performance this year has not been as anticipated and we are not being assisted by the continued difficult trading conditions in the UK and potential uncertainty due to the COVID-19 coronavirus. I am however, pleased with the continued good performance of the wholesale business in the USA and we have good forward order banks in the UK to be delivered during the first half of the year. The initial reaction to the winter ranges has been positive, particularly at our recent New York Fashion Show.”
French Connection see tough end to 2019
In September, the firm saw its’ shares crash following a trading update.
he UK-based retailer said that group revenue for the six months to 31 July amounted to £51 million – a 12.2% decline compared to the £58.1 million figure from 2018.
French Connection said that the decline in group revenue was driven by “the ongoing reduction of the store portfolio and a shift in timing of wholesale shipments into the second half of the year”.
The company added that operating loss from continuing operations improved to £3.7 million compared to £5.5 million from the year prior.
French Connection added that it initially expected the strategic review and formal sale process to end during the first half of the year, but has extended the period given the “active ongoing discussions”.
Shares in French Connection Group trade at 13p (-5.26%). 11/3/20 13:37BST.
