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French Connection posts £7.3m profit-before-tax

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Revenues for fashion retail chain French Connection increased two per cent in the last financial year, results published today reveal.

Profit-before-tax for the full-year period to January 31st was slightly ahead of market estimates at £7.3 million and over ten times higher than in the previous 12 months when it totalled £700,000.

These results exempt the performance of variously closed and disposed of parts of the business which the company discarded during the year, which if included makes a group loss-after-tax of £2.4 million, down from a loss of £24.9 million in the last financial year.

Stephen Marks, Chairman and CEO of French Connection, said: “I am delighted with the significantly improved performance for our latest financial year.

“We have achieved a considerably higher profit from the core continuing operations, notwithstanding a period of major change for the Group and challenging market conditions.

French Connection sold the Nicole Farhi operations during 2010, and its Japanese business was also closed during the period.

An iPhone app was launched by the retailer earlier this week and improvements to its online platform were made last month to boost its multichannel offering.

Maureen Hinton, Practice Leader at industry research company Verdict, commented: “The restructure of French Connection has enabled the company to focus back on its core brand and markets and rid itself of profit depleting businesses. Its results demonstrate the success of this strategy.

“However it has also enhanced the brand’s fashion authority which it had lost somewhat over recent years. As a premium high street brand it can justify the higher prices clothing inflation is producing in the market with its unique design, its store environments and marketing.”

A dividend of 1.5p has been proposed by the company and adjusted earnings per share excluding the trading of the closed stores and the loss incurred through disposal was 7.5p, up from 0.5p in 2010.

Positive cash flow was reported at £6.5 million with closing net cash of £34.1 million, and gross margin is reported to be up 50 base points to 52 per cent.

Marks added: “I am looking forward to growing the business further from the solid foundations generated by our recent reorganisation and I believe there are many opportunities for the group to create further value for shareholders in the future.

“The current economic environment is clearly difficult and it appears likely that it will remain so in the coming year. However, I am confident that we have the people, infrastructure, drive and brand strength to build further on the growth we have achieved.”

Published on Wednesday 16 March by Editorial Assistant

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