17th Sep 2019 11:27
(Alliance News) - French Connection Group PLC's shares fell on Tuesday after it reported a fall in revenue in the first half of its financial year, despite a like-for-like sales rise in the UK & Europe.
The company's stock was trading 12% lower at 33.30 pence each in London late Tuesday morning.
The clothing retailer reported that revenue in the six months to July 31 fell by 12% to GBP51.0 million from GBP58.1 million. French Connection attributed this to "the ongoing reduction of the store portfolio and a shift in timing of wholesale shipments into the second half of the year".
The company sharply narrowed its first half losses, however, to GBP4.1 million from GBP15.1 million. French Connection reported that operating expenses fell by 32% to GBP41.5 million from GBP28.3 million with net store closures reducing costs.
French Connection said its results were in line with expectations.
The company's total branded locations, which includes stores it operates and stores it has franchised or licensed, fell to 275 from 291 at the end of January.
Retail sales fell 13% to GBP23.8 million from GBP27.3 million, again reflecting the reduced store portfolio. On a like-for-like basis however, and despite a "difficult trading environment", retail sales rose by 1.4% in the UK & Europe, compared with a 7.0% fall in the same period last year.
Wholesale operations suffer a 12% revenue fall to GBP27.2 million from GBP30.8 million. French Connection achieved growth in this division in the US, but a shift in sales to the second half in the UK & Europe offset the US growth, French Connection said.
The company added: "We expect to increase sales, compared to last year, over the remainder of the year, given the existing Winter 2019 order books and the positive reaction that we have received so far to the Summer 2020 collections."
Looking ahead, French Connection said it expects challenging retail conditions in the UK to persist.
The company said it has extended its strategic review and formal sale process until the end of the financial year in January. French Connection announced in October 2018 that it was reviewing options, including offers for the company, and entered preliminary sale discussions.
Chair & Chief Executive Stephen Marks said: "I am pleased that the changes we have made to the business over the last few years continue to move us forward. There is no doubt that progress has not been helped by the trading conditions in which we operate in the UK, although our retail performance has been resilient.
"Overall the wholesale business is strong and we continue to see good stability in the licence income. The order books we have provide a clear outlook for the second half of the year in wholesale but it appears that retail conditions will continue to be challenging. Underpinned by these results we remain fully on track to achieve our expectations for the financial year."
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FCCN.L