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French Connection edges into profit as sale nears

French Connection is continuing sale discussions with “several interested parties” as it reports its first profit in seven years.

Underlying operating profit for the year to 31 January 2019 increased to £100,000, before tax, adjusting items and discontinued operations, from a loss of £2.1m the year before.

However, French Connection reported an operating loss including adjusting items of £9.3m, a three-fold increase on 2017/18 when the figure was £3.8m. Taking account of adjusting items and discounted operations, the group said it was “break-even at £0.0m”.

Total group revenue crept up 0.2% to £135.3m, while group ecommerce revenue fell by 3.7%.

Like-for-like sales in the UK and Europe were down 6.8%, because of “the impact of a tough retail trading environment in the UK”.

Retail revenue was down £6.9m to £58.4m for the year as French Connection closed 10 further “non-contributing” units – five stores and five concessions. It opened one store and one concession.

The retail division increased its loss by 6.3% to £10.3m. However, following rent negotiations, several stores that were previously earmarked for closure have remained open.

French Connection has exited more than half of its store portfolio in the last five years. It currently has 96 standalone stores, and 195 franchised and licensed stores.

Group wholesale revenues from continuing operations were up 10.3% year on year to £76.9m.

In the period, the group sold its 75% holding in womenswear brand Toast to Danish fashion brand group Bestseller for £11.7m.

On the potential sale of French Connection, chairman and chief executive Stephen Marks said: “Alongside several potential strategic options, the review includes the consideration of all types of corporate and brand transactions, including seeking offers for the group.

“As disclosed at the time, we had commenced preliminary discussions with several interested parties and have had conversations with several other interested parties about the group’s plans. The discussions are ongoing with a number of parties.

“We continue to expect this strategic review (including the formal sale process) to conclude during the first half of 2019, and will make further announcements when appropriate.”

 

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