CityBeat: FCUK fatigue?
French Connection faces some tough choices if consumers are tiring of the FCUK brand, writes Glynn Davis.
It was interesting to see the shares of French Connection take a serious dip this week as analysts cut their forecasts. One of the reasons given was that there could be some customer fatigue with the FCUK branded products.
There is absolutely no doubt that this sub-brand has brought massive benefit to the company. It has given French Connection the edginess that such a brand needs to appeal to the youth market with the result that its share price moved up to a peak this year of 497.5p.
But the recent fall took them to 361p and, although they have since added 10p, should sales of FCUK product really start to slide then expect it to drop further.
One of the co-founders of former cutting edge ad agency St. Lukes – which famously produced the ‘Chuck out your Chintz’ line for IKEA – suggests that while a company can easily change strategy it is much more difficult to change the positioning of a brand. There is therefore an argument for dumping FCUK before it can drag the whole business downwards rather than trying to re-jig it.
While the City – quite rightly – is only interested in the hard numbers of sales and profits that such fashion retailers churn out, their owners and management have to concentrate hard on the branding as they know how inexorably linked the financials are to the brand.
So if the FCUK brand really is getting a bit tired then it is a serious issue for French Connection because it will quickly feed through to the numbers – and become a major concern for the City. For French Connection it is good that FCUK is only a sub-brand but so successful has it been that many people seem to think it is the actual name of the company.
While some ‘creatives’ would probably argue that branding is more art than science the rest of us know that the counter argument, which shows a direct correlation between a brands’ performance and the share price of its parent company, blows this clear out of the water. This is something French Connection will know all too well as it ponders the future.
[img r]Glynndavis3.jpg[/img][i]Glynn Davis was previously a fund manager in the City, and has since become a business journalist specialising in the retail sector. He contributes to a range of publications including national newspapers and the specialist trade press.[/i]
