French Connection in trouble

British fashion chain French Connection announced a drastic profit warning last week, sending both the City and the industry into a tailspin. Conjecture regarding the company's appalling performance was endemic. The company blamed an unattractive winter range - with too many basics and not enough fashionable items - for the drop in pre-tax profits.

City analysts are now cutting their forecasts for pre-tax profits for the year ending January 2005 by 15% to GBP33 million, as opposed to last year's GBP39 million.

The company's Chairman and Chief Executive, Stephen Marks, admitted to having made mistakes but said the problems would be sorted out. "It's a blip. It's the first time in 10 years, but we'll sort it out," he told reporters. Marks founded French Connection in 1969 but sold GBP36.5 million of his shares in June, thereby effectively losing control of his company. In the wake of his recent divorce Marks conceded that he may not have had his eye on the ball as much as he should have.

Advertising agency WWD recently conducted a study that showed that sex was not selling as well as it had in the past. This might be one of the problems facing French Connection, whose provocative logo FCUK caused much consternation when it first came out in 1997. However, Marks denies rumours that the public has become fed up with the campaign, claiming that the FCUK logo was on less than 30% of the items. He does admit, however, that pricing is an issue. The store's high prices prohibit fair competition with the likes of high street retailers Zara and Next. The rather tired logoed t-shirts do little to stimulate purchasing. It is up to Marks to pull his flagging company out of the mire.