FASHION chain French Connection saw its shares fall sharply yesterday after it suffered weakening sales ahead of the festive season and warned of deeper-than-expected full-year losses.
Although the retailer said it had enjoyed a good start to the autumn and winter season, its sales softened before Christmas, with like-for-like takings in the UK and Europe slipping 2.9 per cent during the 24 weeks to 12 January. The bulk of the decline was blamed on a decision to postpone its winter sale by a week in an attempt to shore up the value of its brand.
The group, founded in 1969 by chairman and chief executive Stephen Marks, said: “We were able to implement a similar delay in the sale start date in North America, where there has also been some disruption from extreme weather in the period.”
As a result, the retailer is forecasting a pre-tax loss of between £7.5 million and £8m for the year to 31 January, having racked up half-year losses of £6.3m.
French Connection recently vowed to improve ranges, sharpen prices and close loss-making stores after a review of its UK retail business. It is expected to give further details of the turnaround plan when it presents full-year results on 13 March.
The company is also introducing a new range of premium womenswear and has broadened its offer to include homewares in larger stores as part of the drive to boost performance.
Seymour Pierce said that yesterday’s figures were much worse than expected – the broker had been predicting full-year losses of about £4.5m. The retailer delivered a pre-tax profit of £5m last year.
Analyst Kate Calvert said: “There must now be question marks over the company’s strategy, which was unveiled in September. It now looks likely that it will be at least two years before results break even.”
Andrew Wade, analyst at Numis Securities, lowered his forecasts following the trading update, and now expects the group to report a pre-tax loss of £7.6m, compared with his previous estimate of £5.2m.
However, Wade pointed out that the firm is predicting it will end the financial year with net cash of £25m, “demonstrating that stocks have been well managed, despite the downgrade”.
Shares in French Connection fell as much as 15 per cent during the day, ending the session down 2.25p, or 7.6 per cent, at 27.25p.
• N BROWN, the catalogue and online shopping group, yesterday said its tie-up with former England cricket star Andrew Flintoff and a £42m campaign to attract new customers helped drive a hike in festive sales.
The Manchester-based firm, which signed Flintoff as a brand ambassador for its Jacamo menswear range in July, saw like-for-like sales rise 7.9 per cent during the 19 weeks to 12 January.
Online sales grew by 17 per cent and now account for almost 54 per cent of total revenue, while it was also benefiting from “promising signs” at its Jacamo and Simply Be concept stores.
Peel Hunt analyst John Stevenson said: “N Brown remains our top retail pick for 2013, underpinned by accelerating growth in the core business and medium-term earnings drivers.”