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French Connection reduces losses as UK and European sales improve

French Connection has reduced its first half pre-tax loss for the third consecutive year, with wholesale and retail both showing signs of improvement.

The group made a pre-tax loss of £3.9m in the six months to July 31, down from £6.1m in 2013 - in line with expectations.

Total group revenue was down 6.6% to £84m, which the company attributed to planned store closures and exchange rate movements. However, underlying retail like-for-likes in the UK and Europe grew by 6% and increased by 1.1% on a reported basis, thanks to a higher proportion of full price sales. This drove the profit margin up by 200 basis points, the retailer said.

Around 14% of group revenue came from Toast, YMC and Great Plains (up from 13% in 2013), with the rest coming from French Connection.

Four stores closed in the period, two in the UK/Europe, one in the US and one in Canada. The group – which comprises French Connection, Toast, YMC and Great Plains had a total of 400 stores and concession across the world at the end of the period, including licensed and franchised locations.

Group retail revenues fell 10.6% from £55.8m in the first half of 2013 to £49.9m.

Group wholesale revenues of £34.1m were in line with the year before, while wholesale gross margin was flat at 32.6% after a strong improvement in the UK and Europe was offset by an increase in off-price deals in North America.

French Connection chairman and chief executive Stephen Marks said: “I’m pleased to report a further positive step forward as we rebuild value in our business. The initiatives we put in place to drive a turnaround in our trading continue to deliver an improvement in performance. While costs will continue to be managed tightly, we are cautiously investing in growth opportunities, trialling new store formats and developing our international business.

“It’s particularly encouraging to see the positive momentum continuing to be reflected in the wholesale forward order book where winter 14 is up on last year and initial spring 15 orders are strong.

“Given the very competitive market place and tougher like-for-like comparatives in the period, we remain cautious about the second half where, as ever, we are dependent on the very important Christmas trading period. We expect the results for the full year to be in line with market expectations, setting the group up for further progress as our initiatives continue to gain traction.”

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