French Connection revenue flat

Clothing retailer French Connection said like-for-like revenue in the third quarter was flat compared to the same time a year earlier following the steep decline in the first half of the year.

The group said trading at its UK/Europe retail business improved during the period, although the market remains inconsistent. Gross margin levels were similar to last year.

French Connection, which reported a 9.5% decline in sales during the first half, said UK/Europe wholesale revenues continued to be below last year as a result of lower forward orders and reduced in-season business.

In North America, retail trading in the quarter was broadly flat on last year in both revenue and gross margin levels. Wholesale revenue continued to grow and overall trading for North America continues to run ahead of last year, it explained.

French Connection reiterated that its joint ventures in Asia are reflecting the retail market slow-down in China and Hong Kong, resulting in a small reduction in profit levels in the period.

"Group profit before tax for the third quarter was broadly in-line with our internal expectations but as ever the overall outcome for the year is dependent on the retail selling season over Christmas and New Year," it said in a company statement.

The group, which concluded a review of the UK/Europe retail business, added: "We remain confident that the initiatives being implemented and tight cost management will result in a steady and significant improvement in the revenue and gross margins in the business and will therefore have a positive impact on group profitability across the next two financial years."

The retailer has reduced inventory and have achieved a £5m year-on-year reduction in stock at the end of October 2012.

However progress on selling off its under-performing stores has been slow as demand for retail space remains weak.

Net group cash at the end of October was £10.6m.

CJ