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French Connection posts FY loss as UK high-street competition weighs
[BENGALURU] Clothing retailer French Connection reported a full-year loss on Tuesday, citing difficult trading conditions on UK's high streets and said it would continue to hold back paying dividends this year.
The retailer, once known for its provocative FCUK brand of clothing and accessories, has struggled to differentiate itself from rivals such as Inditex's Zara, which offers a greater variety of clothes at lower prices.
Along with other British retailers like Ted Baker and Superdry, French Connection has also faced subdued consumer demand brought on by political uncertainty related to Britain's exit from the European Union, while brick and mortar retail is suffering from a shift to online shopping.
French Connection, whose brands include Great Plains and YMC as well as its eponymous label, posted an underlying loss of 2.9 million pounds (S$5.26 million) for the year ended Jan 31, compared with a profit of 0.8 million pounds a year earlier. "Performance during the second half has been considerably worse than expected, particularly during the fourth quarter in the UK," Chief Executive Officer Stephen Marks said in a statement, citing lower in-season orders being received and wholesale deliveries being shifted into the new year.
Like-for-like sales in its United Kingdom/Europe business ended down 2.5 per cent for the year, due to intense competition on UK's high streets - Regent and Oxford- in the second half of the year, a sharp reversal from the 1.4 per cent rise it had seen in the first half.
"We believe the trading landscape in the UK is unlikely to improve in the short term and this has a potential impact on both the retail and wholesale businesses," Mr Marks said.
Total group revenue fell 11.4 per cent to 119.9 million pounds, with wholesale revenue down nearly 5 per cent. Revenue was hurt in part due to the company's decision to close 11 stores, three outlets and four concession stores.
The company also said it was reviewing coronavirus' impact on its supply chains for winter wear coming from the Far East and the further reductions in footfall it could see on UK high streets, but at the moment could not estimate its effect on its business.
The company's stock has lost nearly 54 per cent of its value so far this year.