French Connection UK, Europe trading broadly flat

Clothing retailer French Connection said trading at its UK/Europe retail business was broadly flat on a like-for-like (LFL) basis in the last 15 weeks of trading.

The London based firm saw a strong performance in the early weeks of the year which softened through March but has improved again recently, in line with the market generally.

"We are seeing progress from the initiatives that were instigated following the retail review last year and expect the impact of these to grow as the year progresses. Gross margin levels were slightly lower than last year," French Connection said in a company update.

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It added that UK/Europe wholesale revenues have continued to be below last year, as expected, as a result of lower forward orders and reduced in-season business.

In North America, retail revenue in the quarter was 5% above last year, following higher levels of promotional sales. Revenue in the wholesale channel was below last year after a sluggish start to the year for US department stores.

The group's joint ventures in Asia performed well despite the retail market slow-down in China and Hong Kong, delivering a modest improvement in profit levels in the period.

Looking ahead the retailer said the overall trend has improved with the forward orders for the Winter 13 season in line with those achieved at this time last year.

French Connection, like many other UK retailers, have been struggling to increase sales, as consumers tighten their purse strings amid low wage increases and fears about job security.

Group cash is currently £15.7m compared to £10.4m last year, as the group continues to implement a tight control of working capital.

CJ