French Connection operating losses triple
Written by Hannah McGrath
French Connection saw operating losses nearly triple in 2018, but hailed a small return to operating profit in 2018 as a win amidst a “tough” retail trading environment.
The fashion retailer’s annual report showed that like-for-like sales were down 6.8 per cent, due to the challenging conditions on the UK High Street, while operating losses jumped from £3.8 million in 2017 to £9.3 million last year.
However, despite the downward pressures, the firm highlighted its first return to profitability in seven years, recording an underlying profit of £0.1 million for the 12 months to 31 January, up from a £2.1 million loss in 2017-2018.
Wholesale revenue was up 10.3 per cent year on year to £76.9 million in the UK, Europe and North America, while retail revenue was down 10.6 per cent to £58.4 million.
Group revenue remained stable at £135.3 million, up 0.2 per cent, with the statement highlighting the fact that continued growth in wholesale had been offset by “the ongoing rationalization of the store portfolio and impact of the tough retail trading environment in the UK”.
The company said £11.7 million made on the sale of its Toast brand in April last year had been offset by the cost of “onerous retail leases, debt impairment, store closures” and the restructure of its Canadian business.
The results come after the French Connection group announced it was seeking a buyer for a stake in its retail business, with founder and chief executive Stephen Marks ready to sell his 42 per cent stake in the business.
Commenting on the results, Marks said: “I am pleased to report that we have achieved our target of returning the group to underlying profitability this financial year.
“This has been achieved despite the continued difficult trading environment in the UK and is the culmination of the changes we have made in all areas of the business to adapt to the ever evolving markets in which we operate."