17th Mar 2015 08:01
LONDON (Alliance News) - French Connection Group PLC Tuesday reported a narrowed loss for its last financial year as it continued to close unprofitable stores, cut costs and boost its wholesale and licensing operations, but it cautioned trading for its retail operations remains challenging and it is "planning accordingly".
The fashion retailer has had a tough few years, hit by competition on the high street and as its previously popular FCUK marketing campaign lost its popularity. The company has been trying to turn round the retail operations, but it has proved a struggle as the UK high street remains highly competitive.
It reported a pretax loss of GBP1.6 million for the year to January 31, compared with a GBP6.0 million loss a year earlier, as it cut operating expenses by over GBP10 million and the net loss on store disposals and closures halved.
Excluding the losses on store disposals and closures, its operating loss narrowed to GBP0.8 million, from a GBP4.4 million loss a year earlier, even though revenue declined to GBP178.5 million, from GBP189.4 million, as the store closures weighed on retail revenue.
Retail revenue fell 12.1% to GBP103.3 million as it closed a further nine unprofitable stores. It's expecting to close three or four more in the current financial year.
Wholesale revenue rose 4.6%, while operating profit attributable to this operation rose 25%. Licensing income rise 6.6% to GBP6.5 million.
The higher weighting towards less-profitable wholesale business meant the company's composite gross margin declined to 46.7%, from 47.6% in fiscal 2014.
"The performance of our wholesale and licensing operations were both encouraging, supported by the continued strength of the French Connection brand worldwide. We have also maintained a tight control of costs and have continued to close loss-making stores," Chairman and Chief Executive Stephen Marks said in a statement.
"Although we are encouraged by forward orders in our wholesale business, trading on the high street remains challenging and we are planning accordingly," he added.
French Connection said it end3ed the financial year with net cash of GBP23.2 million, down from GBP28.2 million at the end of its previous financial year.
By Steve McGrath; [email protected]; @stevemcgrath1
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