// French Connection secures £15m funding from turnaround specialist Hilco Capital
// Retailer expects the funding will help it mitigate the disruption caused by Covid-19
// French Connection’s shops have reopened but it is experiencing significantly reduced footfall
French Connection has received £15 million cash injection from turnaround specialist firm Hilco Capital to help it mitigate the financial impact of the coronavirus pandemic.
The fashion retailer said the working capital facility with Hilco Capital is for the next two years.
French Connection added that the £15 million “will be sufficient to cover the company’s cash requirements, based on its current conservative expectations of future trade”.
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The retailer said it expected its current net cash position to reduce in the coming months, as it pays its dues to the HMRC, landlords and suppliers after they were deferred amid the lockdown.
The retailer added it was not eligible for government-backed financing schemes during the coronavirus lockdown.
Since it reopened its stores on June 15, in line with guidance on non-essential retail being able to exit lockdown, French Connection said that as expected, “significantly reduced” footfall has led to low “initial” sales – although conversion rates are better year-on-year.
“We are seeing sales volumes grow week on week, as further relaxation of the lockdown continues, however, we anticipate this to be a gradual process, especially in larger cities,” French Connection said.
Meanwhile, online sales from its UK and US ecommerce sites were up 15 per cent in the last 15 weeks.
French Connection added that wholesale orders were “better than expected” during lockdown.
The retailer was upbeat about its outlook after it secured the funding with Hilco.
“Although the stores have reopened, with appropriate increased hygiene and social-distancing measures in place to keep colleagues and customers safe, it is too early to predict how quickly and to what extent store footfall and therefore sales will recover,” French Connection said.
“This will also impact the rate of improvement within the wholesale channel.
“Given the company’s new liquidity, together with the actions being taken to optimise sales, tightly manage costs and preserve cash, the board is confident that the company is well-positioned to navigate an extended period of uncertain consumer demand.”