French Connection operating loss triples

French Connection
// French Connection full-year operating loss almost triples from £3.8m to £9.3m
// However it recorded underlying operating profit for the first time in 7 years, at £100,000
// Retail sales plummeted 10.6% and like-for-like sales dropped 6.8%

French Connection has revealed deepening operating losses in its full year results as well as dwindling retail sales, which it blamed on a “tough” trading environment.

However, the fashion retailer and wholesaler highlighted a return to underlying profitability for the first time in seven years, and growth in overall group revenues.

For the full year ending January 31, the firm saw its operating loss almost triple year-on-year from £3.8 million to £9.3 million.

On an underlying basis, it recorded profit of £100,000 – a significant improvement on the £2.1 million loss recorded last year.

Citing challenges on the high street, French Connection’s in-store sales plunged 10.6 per cent year-on-year to £58.4 million while like-for-like sales fell 6.8 per cent year-on-year.

French Connection also said it was continuing its store closure programme, having closed down more than half of its portfolio in the last five years. It now operates 96 standalone stores and 195 franchised and licensed stores worldwide.

Meanwhile, its ecommerce revenue dropped by 3.7 per cent year-on-year,

The retailer’s wholesale division painted a more positive image, with sales climbing 10.3 per cent year-on-year to £76.9 million for the for the UK and mainland Europe as well as North America.

This helped French Connection’s overall group revenue edge up 0.2 per cent year-on-year to £135.3 million.

“I am pleased that we have achieved our target of returning the group to underlying profitability this financial year,” French Connection chief executive Stephen Marks said.

”This is only part of our overall journey, however it represents a significant achievement given the results over recent years.

”This has been achieved despite the ongoing difficult retail trading environment in the UK and is the result of the changes we have made in all areas of the business to adapt to the ever evolving markets in which we operate.

”While we still have a way to go to return the business to an appropriate level of profitability, I believe that we have made and continue to make significant progress.”

French Connection has proposed no dividend for its latest year, despite earnings per share increasing from 2.7p last year to 0.1p.The retailer also grew net cash 70.5 per cent year-on-year to  £16.2 million.

The retailer added that it continued to be in talks over a sale of the business, which it first announced back in October.

“The discussions are ongoing with a number of parties,” Marks said.

“We continue to expect this strategic review, including the formal sale process, to conclude during the first half of 2019 and will make further announcements when appropriate.”

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