French Connection reports flat sales
High street fashion retailer French Connection has reported flat like-for-like revenue in its third quarter compared with a 9.5% decline in sales in the first half of the year.
The group said trading at its UK/Europe retail business improved during the 16 weeks to 1 November, although the market remained inconsistent. Sales benefited from more autumnal weather in the period compared to last year with sales of coats and knitwear much improved.
Gross margin levels were similar to last year.
French Connection said UK/Europe wholesale revenues continued to be below last year as a result of lower forward orders and reduced in-season business.
Never Miss a Retail Update!In North America, retail trading in the quarter was broadly flat on last year in both revenue and gross margin levels. Wholesale revenue continued to grow and overall trading for North America continues to run ahead of last year.
French Connection reiterated that performance at its joint ventures in Asia was a reflection of the retail market slow-down in China and Hong Kong. This had resulted in a small reduction in profit levels in the period.
The group said the initiatives arising from its review of the UK/Europe retail business outlined in September were “progressing well” although the selling off of its under-performing stores had been slow as demand for retail space remained weak.
French Connection explained: “The test of operational changes in stores has demonstrated that successful application improves retail sales volumes. As a consequence these are being implemented across the portfolio, targeting key stores first. Changes to the way we develop our product ranges have been implemented and this, together with the changes to the design team, has had a positive impact on the Autumn 2013 ranges.”
Regarding the outlook, the group said: “We remain confident that the initiatives being implemented and tight cost management will result in a steady and significant improvement in the revenue and gross margins in the business and will therefore have a positive impact on group profitability across the next two financial years.”
