Poor summer follows £40m share sale by French Connection founder
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Your support makes all the difference.French Connection, the high street retailer, warned yesterday that sales in the UK over the summer had been poor, disappointing investors just two months after its chairman made nearly £40m from selling shares in the business.
French Connection, the high street retailer, warned yesterday that sales in the UK over the summer had been poor, disappointing investors just two months after its chairman made nearly £40m from selling shares in the business.
Stephen Marks sold nearly 10 per cent of his stake in French Connection in June, reportedly to fund a divorce payment to his wife. But the share sale did spark fears that trading at the group could be struggling. Shares in French Connection have failed to recover since then, dropping 25 per cent, and yesterday slumping more than 11 per cent to close at 329.75p.
"We did have a very good first half but it has gone a bit soft in August in the UK," Mr Marks said. "Last year we had the best summer in 20 years in Britain, which had a very good effect on sales. The high street is now going through a difficult time." Mr Marks still has a 42 per cent stake in French Connection.
The company has added extra retailing space, a further 17 per cent, to its UK stores over the six months to the end of July. But it still saw a 9.5 per cent drop in like-for-like sales. Sales in August have also been "unusually poor", according to Mr Marks.
The new winter range, including ponchos and tweeds, is due in its stores in the next two weeks. The success of this range will be crucial to the company's performance over the important Christmas trading period.
Mr Marks also vowed to keep using the company's controversial advertising slogan, fcuk, which has come under fire from moralists but also critics who believe the shock value of the slogan has become tired. But he also said the group would be using a new advertising tactic - launching adverts with no mention of French Connection at all.
Aside from the UK retail performance, Mr Marks was keen to stress the success of the brand worldwide. Across the group, pre-tax profits were up 12 per cent to £15.4m in the six months to the end of July, with turnover up 5 per cent. Sales of clothes to the wholesale market, such as department stores, have seen strong growth, with a 16 per cent increase in sales over the half year in the UK and Europe. The company said forward orders for its winter range were ahead of last year's. Licensing the French Connection brand has also been a success, with income from licence fees up 43 per cent to £2m.
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