Investors try to bag French Connection

Helen Cahill
Follow Helen
French Connection Issue Profit Warning
Activist investor Gatemore Capital wants French Connection to change its branding (Source: Getty)

Several overseas buyers have been making approaches to buy struggling high street fashion store French Connection.

Preliminary offers for the company have been made on several occasions, and it is understood that investment advice firm Moelis has been handling the processes, but no formal agreement has been reached.

Read more: French Connection faces demand to drop FCUK branding

French Connection has suffered its fifth year of losses and is under pressure from activist investor Gatemore Capital, which owns eight per cent of the retailer's shares.

Gatemore has been pushing for a change of management and the closure of French Connection's loss-making stores.

In an open letter criticising French Connection, Gatemore said: "French Connection's gross margins are well below industry average. This is the primary issue facing the company, and fixing it would catapult French Connection to a healthy level or profitability.

"There is a critical point the company fails to acknowledge: it simply maintains too broad a range.

"Maintaining such a broad range directly affects gross margins in that it increases the per unit costs of production, due to lower volumes per unit, and increases other costs such as design."

Stephen Marks, who founded the company, owns a 42 per cent stake in the business and has been rebuffing buy-out offers.

French Connection and Moelis did not wish to comment.

Related articles