French Connection reports first half loss

Fashion brand French Connection revealed a first half loss compared to a profit the same time a year earlier in what the company described as a "very difficult" six months.

The group, which issued a profit warning in May, posted a pre-tax loss of £6.3m in the six-month period ended July 31st 2012 compared to a profit of £0.7m in 2011. Revenue during the period fell to £96m compared to £102.8m a year earlier.

Chairman and Chief Executive Stephen Marks commented: "The last six months have continued to be very difficult for French Connection's UK/Europe retail business which has had an impact on the Group results for the period."

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"We have completed our extensive review of the retail business and have implemented a set of detailed initiatives across a broad number of fronts designed to improve the performance of the retail division and the business in general."

Profit margins were hurt as the retailer slashed prices in a bid to boost sales. Gross margins fell 2.3% to 47.7%.

Meanwhile the key UK/Europe retail division suffered another difficult season, with revenue down 10%. North America fared better, with revenue and profit improving and further growth in licensing income. French Connection said it had a solid performances from the Rest of the World business and its Asia joint ventures.

"We recognise that the route to sustained recovery is likely to take some time but we are committed to building on French Connection's core strengths," Marks added.

"The operational focus of the initiatives is on improving our store operations, developing our product offering and improving merchandise management. In addition we have strengthened our senior management team and will continue to target the disposal of loss making stores. We are confident that these actions will produce a growing positive impact on our trading performance over the next two financial years."

CJ