French Connection has reported a “tough trading period” for the first six months of the year, with pre-tax losses widening on the back of a poor performance of the spring 15 collection.
Shares in the company fell by seven per cent in early morning trading on the news.
The retailer reported loss before taxation of £7.9m for the six month period to July 31, compared with a loss of £3.9m last year.
Group revenue was down 9.8 per cent, to £75.8m. Retail led the poor performance, with an underlying loss of £11.1m.
However, at least one part of French Connection's turnaround plan is still coming together: costs were reduced, with underlying operating expenses 1.4 per cent lower than the same period a year ago.
French Connection have continued to shut stores, with six closed during the period, and three-four to be closed in the second half of the year.
The retailer said it expected the autumn 15 collection to perform better, saying “retail trading over the first six weeks of the second half has been stronger”.
Why it’s interesting
This was to some extent predicted: In April French Connection issued a profit warning in their trading statement, where it said it expected full-year results likely to be “materially lower than expected”.
And the disappointing performance of the spring 15 collection continued throughout the season, leaving French Connection to say that it have had “a tough trading period”.
But investors will have been hoping for more signs that French Connection's turnaround, which chief executive Stephen Marks has been spearheading for some time now, will have delivered more.
What French Connection said
We have already closed six stores during the period, with more targeted in the second half. We have also made operational and personnel changes to drive improvements in performance, notably in both design and merchandising.
Improved retail trading especially in recent weeks of our new winter 15 collection, the continued growth of licensing, solid spring 16 forward orders, and tight control of costs, are positive signs.
We are pleased with the recent change of trajectory in UK/Europe retail performance, particularly given soft trading on the high street in August.
Trading, however is unpredictable, and we are as ever dependent on the Christmas selling period.
The company continues to shut stores and reduce costs, but investors will want more from the turnaround than French Connection is currently giving.