French Connection, the men’s and womenswear chain, has said it is “firmly back on a growth path” after posting a profit for the first half, with a substantial increase in wholesale income and growth like for like retail sales.
The retailer reported a 7% growth in revenues for the six months to July 31 with sales rising to £102.8m for the period. Its profits before tax also rose to £0.7m from £0.2m in the comparative period. Group profit after tax for the period was £1m compared with a loss of £12.7m last year.
The company attributed the rise in revenues to the strength of its brand and quality of the product range.
French Connection said its UK/Europe retail business had seen a surge in sales volumes during April due to a feel good factor generated by the good weather, bank holidays and the royal wedding. May and June slowed a little but the company said it achieved a “very good performance” during the end of season Sale period. French Connection overall saw an increase in gross like-for-like sales of 4.6%.
Gross margin was however lower than the same period last year due to contributing factors including the rise in input costs and the increase in VAT.
Wholesale revenue in the UK/Europe was 19% more than last year at £20.3m due to stronger forward orders and new customers including a new franchisee in Russia.
Chairman and chief executive Stephen Marks said it is the first time the company has reported a profit after tax in the first half of the financial year since 2008 and added “we are firmly back on a growth path”.
Marks said: “With the business on a stronger footing, we are in a good position to expand operations internationally. We see great opportunities to grow revenues from both franchising and licensing.
“The global appeal of our brand is evident in our continued growth overseas, and over the next three years we are looking forward to opening as many as 25 more stores in China under our Joint Venture as well as additional store openings by our franchisees in Russia, India and Turkey,” he added.
He said that the balance sheet is very strong with no debt and £30.9m of cash.
But Marks added: “We do not anticipate any easing in the retail environment during the second half of the year. However we have a proven ability to produce high quality and desirable ranges and with good increases in wholesale forward orders to support this, we remain confident in achieving our expectations for the full year.”