French Connection shares up as losses narrow and takeover interest revealed

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French Connection's shares jumped this morning (Source: Getty)

French Connection shares are climbing this morning after the company revealed it had held discussions with a potential US buyer last year but no offer was made.

The company also unveiled its full-year results, showing an incremental increase in revenue and a smaller pre-tax loss.

Shares jumped as much as 18 per cent in early trading.

The figures

French Connection reported that revenue for the 52 weeks to the end of January 2018 was up 0.5 per cent at £154m.

Like-for-like sales continued to grow, but at a slower rate of 0.8 per cent compared to 4.4 per cent last year.

The group narrowed its pre-tax losses to £2.3m, smaller than a £5.3m loss in the prior year.

Why it's interesting

French Connection said it had received an unsolicited approach about a potential offer for the group from a third party in the US. "In the interest of all shareholders, we entered a period of full due diligence and negotiation over a number of months," chairman and chief executive Stephen Marks said in his statement. "This ultimately did not lead to an offer for the group."

Meanwhile, the business has been getting back on its feet, though today's results now mark the tenth year of losses for French Connection.

Marks said that the group was "very close" to achieveing its goal of profitability, as it continues to close stores in the UK and find success in wholesale.

Another eight stores are expected to close this year.

What French Connection said

Marks commented on the current consumer climate, saying: "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. In addition the reaction to our collections and strength of our wholesale orders both for the spring and winter seasons further underpins the performance going forward. Although we are only early into the year, I believe we are in a very strong position to make significant progress again."