Shares in French Connection plummeted after it warned weak trading in the third quarter means it is unlikely to achieve original expectations for the full year.
The retailer reported disappointing like for like sales in its UK/Europe retail business from 1 August to 16 November 2011 as it continues to struggle with cautious consumers and unseasonably warm weather.
Revenue in its UK retail stores was good during the early part of the third quarter, but then slowed considerably following the end of the sale period, the retailer explained.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
French Connection said while it aims to recover as much of this shortfall as possible in the fourth quarter, it is likely to miss previous full year forecasts.
"The UK fashion shopper continues to act very cautiously and, in addition, the unseasonably warm weather has had a negative impact on sales of our winter ranges."
Like-for-like retail revenue at its UK/Europe retail business fell 9.5% year on year over the last three months.
Third quarter group pre-tax profit fell £1.8m from the same period last year, after a poor performance in UK/Europe retail.
Looking ahead and based on its experience in the summer sale earlier in the year, French Connection expects that revenue in December and January will be stronger than last year, although it is unlikely that the shortfall so far will be fully recovered.
Revenue at the UK/Europe wholesale business rose 6% from the same period a year before. Wholesale forward orders for the Summer 2012 ranges in UK/Europe remain well ahead of last year and this will boost revenue towards the end of the financial year.
Elsewhere in North America retail trading has been broadly flat on last year in both revenue and gross margin. Wholesale revenue has been well ahead and overall the trading result for the North America region continues to run well ahead of last year.
Its joint ventures in Asia and its brand licensing income both continue to perform well.
The Group continues to operate with a strong balance sheet and no debt.
--
cj
-
Thousands of Neil Woodford investors sue Hargreaves LansdownMore than 5,000 people who invested in Woodford's collapsed equity income product are taking Hargreaves Lansdown to court
-
Is now a good time to invest in gold?In the current market conditions, is gold a good investment? We explore the reasons why now might be a good time to put some money into gold.
