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French Connection to miss profits target as sales drop 9.5%

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UK-based fashion retailer French Connection has today revealed a significant slide in trading for it last quarter, blaming warm weather on poor winter garment sales.

Like-for-like sales at the business for the period from August 1st 2011 to November 16th showed a 9.5 per cent decline compared to the same period last year, with the unseasonable weather during much of the autumn affecting trader in winter product lines.

French Connection has resisted cutting prices but group profit before tax (PBT) for the quarter was still down £1.8 million year-on-year and, although trading is expected to improve in Q4, full-year targets are now likely to be missed.

A statement from the firm read: “Revenue in our UK retail stores was good during the early part of the third quarter, but then slowed considerably following the end of the sale period.

“The UK fashion shopper continues to act very cautiously and, in addition, the unseasonably warm weather has had a negative impact on sales of our winter ranges.

“Based on our experience in the summer sale earlier in the year, we expect that revenue in December and January will be stronger than last year, although it is unlikely that the shortfall so far will be fully recovered.”

In September the retailer announced a PBT rise of £500,000 for the first half of its financial year compared to just £200,000 the previous year, and also reported its first half-year profit after tax since 2008.

Today’s results will seem like a setback for the company which has been slowly working its way back to profitability over the last few years through a transformation programme after going close to the brink.

North American retail sales were flat in the quarter for French Connection but wholesale trading reportedly grew for the region, and for its UK and European operations wholesale revenue was up six per cent year-on-year.

The statement continued: “The group continues to operate with a strong balance sheet and no debt. While the recent sales performance has had the consequential effect of increasing inventory levels, we are confident that this will be cleared through our normal channels.”

Published on Thursday 17 November by Editorial Assistant

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