French Connection will not renew its licensing deal with footwear supplier Lambert Howarth as it shakes up its footwear strategy.
Sources told Drapers that the brand was understood to be deciding whether to continue wholesaling footwear.
The 200-store retailer revealed this week that group pre-tax profits had plummeted 67.2% to £4 million for the year to January 31, while sales had fallen 2% to £241.3m.
The decision to end the footwear deal, which Lambert Howarth representatives described as "mutual", means the four-year contract will expire in December. The licence was operated by Lambert Howarth's Concept LH division.
French Connection revealed that licensed income from external sources fell to £3.6m for the year, compared with £4.7m the previous year. The business attributed most of the drop to a toiletries licence.
However, a source close to French Connection said that the business had been unhappy with its licensed footwear. He said: "French Connection is looking at reorganising how it produces the footwear and how much product it has for sale in the retail environment. It will either choose to re-license the deal or bring it in-house."
A source close to Lambert Howarth said it would still supply French Connection's retail stores, but as one of a number of suppliers. She added that it was currently working on the spring 08 collection for the retailer.
French Connection refused to comment on the licensing deal.
The retailer is understood to be capping the opening of franchise stores, and will not open any more standalone shops until its store at London's White City launches in 2008.
It also plans to open two stores for its sister brand Toast, as French Connection chairman Stephen Marks looks to grow the business.
THE FIGURES IN FULL
- French Connection group sales down 2% to £241.3 million
- Group pre-tax profit fell 67.2% to £4m
- UK and European retail sales rose 3% to £116.1m
- Retail like-for-likes rose 1%
- Wholesale sales were down 16% to £63.4m
- Total wholesale sales fell 25% in the first half, then 6% in the second half of the year
Chairman Stephen Marks said: "Results are very disappointing, but there is good evidence to show we are at the start of a new phase in our business cycle."