Drop in French Connection profits

14 Mar 2007 • by Natalie Aster

French Connection has suffered a sharp fall in annual profits after what the fashion retailer said had been a "very disappointing year", reported BBC.

Profits in the 12 months to 31 January slid to £4m ($7.7m) from £15.7m for the year before, with overall revenues down 2% to £241.3m.

The retailer's spring and summer collections disappointed, continuing a negative trend which began in 2005.

But the firm said there had been an improvement in the past six weeks.

The firm's shares fell 7.75 pence, or 3.4%, to 215p in early trading.

"The financial results for the last year are very disappointing," said chairman Stephen Marks.

"The results reflect the continued impact of the difficulties we first experienced in 2005." French Connection's UK stores actually saw a 1% rise in like-for-like sales, an indicator which excludes the impact of new store space, during the period.

But the firm had to heavily discount many items and said its future focus would be on boosting full-price sales at its outlets.

The retailer is optimistic that it has begin to turn a corner, with like-for-like sales of its autumn and winter womenswear collections 6% higher than a year ago.

But sales of its menswear range remain flat, while profits at the firm's wholesale supply business fell sharply in the past year.

Once seen as a style leader, French Connection has struggled to react to changing fashion trends in the past two years.

Its profits halved in 2005 and its made a loss in the first half of 2006.

But Mr Marks said he believed the firm was slowly re-establishing its "fashion credentials".

"While recovering the lost ground will take some time, we are now in the situation of having something positive to build on with improving trends," he said.

"While there remains much to achieve, we believe we are now in a position to build on these early signs and return to growth."