The company’s pre-tax losses have increased from £5.3 million last year compared with £3.5 million in the previous corresponding period. Revenue fell 6.7 per cent last year to £153.2 million.
The struggling fashion chain, which was founded in 1972 by chief executive and chairman Stephen Marks, is now under pressure from investors to shake up its board and break up the business.
Charlotte Pearce, associate retail analyst at GlobalData, said that while French Connection has reduced its loss by 21.3 per cent year-on-year, it has its work cut out to turn the business around.
“The closure of nine unprofitable stores during the period has benefitted l-f-l retail sales, along with a warmer reception to its more recent ranges,” she said. “However, given that l-f-ls are up against weak comparatives, one would expect a stronger performance than low single digit growth. Plans to close eight stores in FY2017/18 will further boost l-f-ls as its portfolio strengthens.”
The fashion retailer has closed nine underperforming stores in the UK, Europe and North America in the period.
Pearce said as market conditions will become more challenging in 2017, French Connection must redefine and better communicate its brand identity in order to win back shoppers lured away by rivals such as Zara, ASOS and Topshop – which all undercut on price, outperform on fashionability and have a clear differentiated offer.
According to Pearce, investment in range expansion via its new activewear offer is a positive move, enabling the retailer to drive up spend among its loyal, albeit small, customer base; however, the real challenge is changing consumer perception.
“Gaining a greater understanding of its target customers and regaining relevance will be pivotal to drive appeal among lapsed shoppers,” she said.
She added that while French Connection often makes small steps in the right direction, its overall progress remains slow.
“With competition intensifying, it is a tall order for French Connection to become a go-to destination on the high street, so seeking out third party distribution opportunities via department store concessions and online pureplays must be the prevailing strategy going forward,” Pearce said.
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