- Annual pre-tax losses slashed from £5.3m to £2.3m over last year
- Shares surged by 26 per cent during morning trading
- Goal is to have around 30 full-price stores by the end of next January
Stephen Marks believes French Connection is close to returning to profits
Fashion retailer French Connection is ‘very close’ to returning to profitable trading, despite posting annual losses for the sixth consecutive year.
The upbeat assessment from the fashion chain followed a reduction in annual pre-tax losses by nearly 50 per cent from £2.3 million from £5.3 million, the previous year.
Shares surged by 26.11 per cent during morning trading, up 8.8p per share, in response to the annual trading figures.
Chairman and chief executive Stephen Marks responding to the trading figures said: ‘Our goal has been to return the group to profitability and I believe we are very close to achieving that aim, given the momentum that we are currently seeing within the business.
The chairman and CEO added: ‘While it is clear that the retail market in which we are operating in the UK is unlikely to improve in the near future, we have clear visibility on the benefits we will obtain from the ongoing portfolio rationalisation.’
French Connection pulled the shutters down on 11 stores and concessions over the last financial year and said it would continue to axe unprofitable sites.
The fashion company’s goal is to have around 30 full-price stores by the end of next January.
Retail like-for-like sales grew by 0.8% over the year to January 31; a marked slowdown on the 4.4% rise seen the previous year.
Also, its operating losses were slashed to £600,000, down from £3.7 million the previous year.
An 8.6% surge in wholesale revenues helped boost overall group sales, up 0.5% to £154 million.
French Connection has pulled the shutters down on 11 stores during the last financial year
Last year the company faced severe criticism came from investors, with activist investor Gatemore Capital Management calling for a break-up of the company.
Marks, who owns a 41 per cent stake in the company, was also urged to give up his roles as chairman and chief executive.
The group has 116 stores and concessions and a further 212 franchised outlets; down by 6.5% and 26% respectively over the past financial year.
French Connection opened its first new store in years in Manchester last November as part of its strategy to open bricks and mortar sites in ‘appropriate locations’ that will ‘trade profitably’.
French Connection, which made a name for itself selling FCUK branded clothes, has been struggling to fend off competition from fast-fashion rivals such as ASOS Plc, Forever 21 and Inditex’s Zara.