French Connection‘s shares have crashed by 20% in early trading, leading the UK fashion chain to warn that its financial performance this year will not be lucrative.
“The current financial performance for the year is now expected to be below the current market expectations” the upmarket fashion retailer confirmed.
Shares were down by 10.9p to 41.07p in the first half hour of trading, while stock is now down by more than 43% in the last year.
Although no major reason had been given as to why the company is struggling, the retailer has been having difficulties pushing the brand since its 90‘s heyday. It has closed 9 ‘non-contributing stores‘ within the last year and it has recorded “disappointing” quarters down to a reduction in stock levels during the winter sale period, un-seasonally warm weather and tougher comps in Q3.
The news comes as a shock to analysts who expected the retailer to receive full year profit of £400,000. The company‘s overall loss is now expected to be in the region of £3.6m.
In March, French Connection highlighted its underlying operating loss of £800,000 for the year to January 31. This was a large improvement from its £4.4m decline in 2014.
The business looks set for another testing year and is preparing with further closures:
“We have been putting in place many improvements across the business in the last two years and will continue to implement positive change across the Group. We continue to execute our store closure plan and we now expect to close 7 stores during the current year.”