French Connection profits cut after store closures
The owner of the Toast, French Connection and Great Plains brands has been struggling to fend off competition from fast-fashion rivals such as Asos, Forever 21 and Inditex’s Zara. It has closed stores and hired new management and design teams as it tries to return to a profit.
In March activist investor Gatemore Capital urged the loss-making company to split itself or spin off its Toast brand, among other options. It offloaded its entire stake in July, saying it was not satisfied with the pace of change at the 45-year old retailer.
British billionaire Mike Ashley’s Sports Direct took an 11.2% stake in French Connection in February, becoming its second-largest shareholder. Sports Direct’s intentions were not clear.
French Connection said gross profit for the six months to July 31 fell to £31.1m (€35.5m) from £38.1m a year ago. Revenue came in at £68.1m, down from £69.2m a year ago.
French Connection, which has more than 409 outlets, said it closed seven stores over the last 12 months, reducing its trading space by 10.2%. Sales at stores open for more than a year in the UK and Europe were “broadly flat”, it said.
However, revenue at its wholesale operation rose 7.2% to £29.6m, with the business returning to growth in the UK, Europe and North America. French Connection posted its fifth annual loss in a row in March.
