French Connection H1 sales plunge, loss widens

For the six months, French Connection Group Plc reported revenue of 23.9 million pounds, 53.1 percent or 53.2 percent at constant currency lower than the previous period. In a preliminary results statement, the company said, retail revenue declined by 57.6 percent or 57.6 percent at constant currency to 10.1 million pounds with both UK/Europe and North America sales significantly impacted by Covid-19 store lockdowns during the majority of H1. Wholesale revenue reduced by 49.3 percent or 49.4 percent at constant currency to 13.8 million pounds. Retail gross margin was 18.8 percent compared to 52.5 percent last year, while underlying retail loss in the six months increased to 7.5 million pounds compared to 5.2 million pounds in 2019.

Commenting on the results, Stephen Marks, the company’s Chairman and Chief Executive said: “Despite the unprecedented difficulties we continue to face alongside the rest of the High Street, having been able to secure the necessary financing we feel that we are well positioned to navigate an extended period of uncertain consumer demand but also ready to capitalise on any opportunities that may arise especially given the good performance of wholesale, while maintaining a very tight control of costs.”

Review of French Connection’s first half results

The company added that composite gross margin of 15.1 percent was significantly lower than the previous period 42.7 percent reflecting the lost full price selling period, increased clearance sales and additional stock provisioning relating to unsold product at the end of H1.

The impact of Covid-19, particularly on our ‘bricks and mortar’ wholesale customers, has resulted in declines in all geographic revenues with decrease in UK/Europe to 6.8 million pounds, North America to 6.4 million pounds and the Rest of World to 0.6 million pounds. Underlying wholesale performance in the first half was a loss of 1.3 million pounds against profit of 4.8 million pounds in 2019.

The company further said that the group retail revenue declined principally due to the closure of all stores from late March to mid-June as a result of Covid-19 lockdown restrictions. Four non-contributing stores including one outlet were closed during the last six months, together with five concessions. Over the past 12 months, French Connection closed nine non-contributory stores and nine concessions.

French Connection posts loss across core geographies

The company said, UK/Europe proportion of sales decreased to 67 percent compared to 72.5 percent last year driven by the continued strong performance of the US wholesale ‘department store’ business increasing the North America share of global revenue to 30.5 percent compared to 25.1 percent in 2019. Rest of World revenue remained similar at 2.5 percent.

The impact of Covid-19 has resulted in a decline in all geographic regions; UK/Europe loss increased to 7.2 million pounds, North America generated a loss of 1.6 million pounds and the Rest of World contributed a loss of 0.5 million pounds. Licensing income of 1.5 million pounds generated during the first half fell by 44.4 percent.

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