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FCUKed Big losses for fashion retailer
(Guardian (UK) Via Acquire Media NewsEdge) French Connection has warned that it will plunge into the red by up to pounds 8m this year after a decision to delay its winter sale tore into profits.
The retailer, which was criticised last year for maintaining an average garment price tag of about pounds 100 at a time when customers were cutting their spending, put off its sale period by a week as part of a process to "build brand equity", the company said in a trading statement yesterday. But the strategy backfired, with shoppers drawn to cheaper fashion at Top Shop, Zara and online store Asos. Like-for-like sales of French Connection's fashion goods (pictured above) in the UK and Europe fell by nearly 3% in the six months to 12 January, and the shares fell 8% to 27.25p. Less than a year ago they were changing hands at 121p.
Nearly 2% of lost revenues were blamed on the change of sale date, and the group as a whole, which also owns the Toast and Great Plains brands, now expects a loss of between pounds 7.5 and pounds 8m for the full year, having dipped pounds 6.3m into the red in the first half.
French Connection made a pretax profit of pounds 5m in its previous financial year, and 2013 will mark its first loss since 2009. Major restructuring including the closure of stores in Japan and the US and the sale of its upmarket Nicole Farhi label helped to keep the chain afloat, but the benefits appear to have been short-lived. Juliette Garside
(c) 2013 Guardian Newspapers Limited.
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