French Connection’s like-for-like retail sales grew 6.5% in the six months to 31 July, but “tougher trading” in wholesale and licensing led to losses of £7.9m, flat on the same period last year.
HSP French Connection
Overall revenue was down 2.3% following the closure of five stores during the half-year. Five more are expected to close in the second half.
The business said strong sales of the spring 16 collection in the UK and Europe led to the uptick in like-for-like sales, despite the tough retail environment, but the wholesale side of the business was “more challenging”.
The company said the “disappointing” wholesale performance, down 16.9% on 2015, reflects “the legacy of the poor sales achieved last year and the difficult retail market conditions”, which reduced retailers’ buy during the season.
Licence income of £2.4m was generated during the period, down 20% on the year before.
Gross margin edged up slightly from 45.5% to 46%, reflecting the better performance of retail.
Ecommerce sales increased to represent 26.5% of group retail revenue, up from 22.3% last year. Mobile and tablet sales made up 50% of ecommerce revenue, up from 47% in 2015.
The business said the performance of the spring 16 collections was “clear evidence” that its design-led approach is moving the business in the right direction.
It added that trading in the first six weeks of the second half was strong, and the performance of the autumn range so far was “encouraging”.
Stephen Marks, chairman and chief executive said: “Although the overall performance for the first half has been disappointing, the retail result has been particularly pleasing when compared with last year in what has been a difficult retail environment. Performance in wholesale and licensing has been more challenging but we have started to see an improvement recently and expect to see a recovery in the second half.”
He added: “There is still much work to do in the rest of the year to move the business forward significantly but we believe the team we have in place and momentum we are seeing will help us to achieve this. As ever, the overall result will be dependent on the Christmas trading period, but the second half of the year has started well.”