Third 2012 profit hit rocks French Connection stock
FRENCH CONNECTION shares plunged more than 20 per cent yesterday after the fashion retailer issued its third profit warning of the year as tough high street conditions continued to take their toll.
The chain said it “appears unlikely” that its full-year profits will meet expectations after revenues fell 9.5 per cent in the three months to 17 May from the same time last year.
Analysts had previously forecast a pre-tax profit of between £3m to £4m.
Like-for-like retail sales in Europe and the UK slumped 12 per cent in the period as consumers continued to grapple with muted wage growth and lower disposable income.
The retailer said margins were also hit by shoppers demanding bigger discounts in the January sales.
“We are being relatively conservative on our outlook because we are not sure that we can see much reason for expecting any bounceback in the market or any growth this year,” finance director Roy Naismith said.
“Clearly we have got to grasp hold of this UK retail position with the market that exists at the moment and ensure that we get back to a sensible position.”
He said the strategic review of the business launched in March, was “well under way”, which will include renegotiating or exiting leases on some of its 71 UK stores.