// French Connection seeks urgent funding in battle for survival
// It is currently urgent talks with potential funding partners to stay afloat amid the coronavirus crisis
// French Connection’s board felt “confident” of raising the funds that would see it through the pandemic
French Connection has warned that if it does not secure urgent funding it expects its cash resources to be “eroded” over the next couple of months.
The fashion retailer announced today that accessing government funding to support the business amid the coronavirus crisis has been “challenging” and that so far, and that it has only succeeded in the Job Retention Scheme for colleagues and one-year business rates relief for the store portfolio.
French Connection warned that if trading conditions stay as they are and it is unable to access further funding, its cash sources would deplete over the coming months.
As a result, the retailer is now in talks with several potential partners for some fresh cash injection.
French Connection’s board said it was “confident” it would secure enough funds to support the business until trading levels return to normal.
The retailer has already taken a number of steps to preserve cash amid the coronaviris crisis.
This includes agreeing payment terms with suppliers, reducing orders numbers with factories, negotiating with landlords on possible rent holidays and rescheduling payments due to HMRC.
However, French Connection also reported that its online sales in the UK and the US were up 44 per cent over the last six weeks, and that it was still supplying a few of the predominantly online wholesale customers that are still trading during the lockdown.
The retailer also plans to reopen stores from June 1, in line with government guidance and in a “orderly manner” to protect staff and shoppers.
“In the light of the company’s current cash position and the continued expected weak trading environment, we have been in active discussions with a number of potential funding partners,” French Connection said.
“The board is confident of raising sufficient funds to support the business until the return of trading levels that are able to support the ongoing operations.
“This process is proceeding well and we are making good progress on due diligence and agreeing terms.
“Without securing additional funding and should the current Covid impacted trading levels continue, the company’s cash resources will eventually be eroded in the coming months.
“We have been developing plans for when the stores reopen to ensure they do so safely and in line with all government guidance, so that our customers and colleagues will be able to shop and work confidently in a safe and healthy environment.
“Given the UK Government’s recent update regarding the potential phased reopening of stores from 1 June, we are planning to open up in an orderly manner to ensure everything required is in place.
“We look forward to returning to more normal levels of trade as the situation evolves, although we do not expect this for some time to come.”