Gatemore Capital Management, which holds an 8% share in French Connection, has called for the break-up of the beleaguered group after “disappointing” results.
It said the group, which includes French Connection, Toast, Great Plains and YMC, should be broken up since the sum of its parts is “around two to three times greater than the whole”.
“The [French Connection] brand alone is worth, by our estimates, upwards of £84m or, 12 times annual licensing revenues of £7m,” said Liad Meider, managing partner and chief investment officer at Gatemore.
The investor is urging the company to accelerate its store closure programme, particularly with the sale of the Oxford Street lease.
“The wholesale business makes money and Toast has standalone value,” he said. “By our estimates, the business should be worth between £80m and £100m. The company clearly has a number of strategic alternatives available, and we would argue that the board is in breach of their fiduciary duty if they are not pursuing them.”
He also called the board a “mockery of modern corporate governance”, as Stephen Marks is refusing to split his role as chairman and chief executive.