French Connection is to close its 21 stores in Japan over the next nine months and is looking for a licensee to operate the brand in the Japanese market.
French Connection Japan was forecast to generate a loss of £2.5m in the year to January 31 2010, having notched up a loss of £1.7m in the six months to July 31 2009. The retailer will trade as usual in Japan until the end of the year, and then will trade the stores down, clearing any excess stock.
French Connection bought out its Japanese partner Renown and took 100% control of the French Connection Japan business last year.
The decision to shutter the Japanese stores follows the news last month that French Connection would close its Northern European division as it said group pre-tax losses were £12.8m for the six months to the end of July.
French Connection chairman and chief executive Stephen Marks said: “Japan continues to be an important market and presents a good opportunity for French Connection in the future. We will be maintaining brand presence in the market through our e-commerce offer, however in light of our strategic review and our aim of improving both profitability and cash generation for the group in the short term, we feel that the most effective way of operating retail stores in this market is through a licence partner.”
French Connection said in a Stock Exchange announcement that after the recovery of significant lease deposits, the cash cost of the closure will be less than £500,000.
French Connection added there will be one-off charges to the profit and loss account in the year to January 31 2010 amounting to approximately £2.5m relating to closure costs and asset write-downs.