Mar 27, 2019 | By Volker Ketteniss
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Sign of improvements for French Connection Group alongside an upbeat outlook from its CEO Tuesday. The UK fashion retailer reported a narrowed H1 pre-tax loss, as a slight drop in revenues were hit by fewer stores. There was also good news on the wholesale winter orders front, its spring offer has had a “very strong reaction” and full-price sales for the start of H2 are also up. No wonder chief executive Stephen Marks said the basket of good news has given him “confidence the company will record good performance during the rest of the year.”
For the six months ended July 31, the fashion retailer made a pre-tax loss of £5.7m ($7.7), down from a loss of £7.9m a year ago. The Retail division’s contribution “improved” with the operating loss cut by 18.3% to £6.7m.
Revenue fell 1.6% on-year to £68.1m (down 4.2% excluding exchange rate effects), which the retailer said was due to a reduced store portfolio that offset an improvement in the wholesale business, up 7.2% (+2.6% currency neutral to £29.6m.)
Overall Retail revenue fell 7.5% to £38.5m (-8.7% currency-neutral). Comparable sales in the UK and Europe were “broadly flat” with margins – up to 56.6% from 56.3% – benefitting from fewer markdowns.
The retailer has also continued to see progress in its e-commerce business which now represents 29.2% of its retail sales, up from 26.5% a year ago. Mobile continues with its growing influence on digital sales, now making up 45.4% of traffic from 36.4% a year ago.
That all comes as something of a minor relief for investors that have seen the retailer suffer years of losses and falling sales. The company has been cutting underperforming stores aggressively in recent periods and its store space is down around 10% overall.
Marks said: ”We have definitely seen momentum build in the first half of the new financial year.
“The work we have been doing to refresh and strengthen the French Connection brand [is] definitely having a positive impact.”
He added: “We have been working with the goal of returning the group to profitability as soon as possible and, while there is still much to do, I believe that we have made significant steps to achieve that in the near future.”
French Connection has appointed two new independent non-executive directors: Sarah Curran and Robin Piggott replace Claire Kent and Dean Murray who are stepping down. Curran is the founder of now-defunct My-Wardrobe and until recently the driving force behind VeryExclusive. Piggott has held senior roles at Moss Bros and Alexon.
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