French Connection's chief executive has admitted its products have "not been up to scratch" in the last year after the fashion retailer crashed to a half-year loss, which sent its shares tumbling.
Following a review of its retail business, Stephen Marks said the chain had started to make changes after a "very difficult" six months. The moves include hiring a new head of womenswear design and retail managing director, sharpening its buying practices, and trying to exit under-performing stores. Mr Marks said: "The public vote with their feet and were not rushing in to buy the product."
While the loss had been expected after it was flagged up in a trading update last month, the City appeared to be spooked by Mr Marks' comments and French Connection's shares fell by 2p, or 8 per cent, to 23p.
The group, which has stores in the US, India and China, posted a loss of £6.3m over the six months to 31 July, following a profit of £700,000 in the same period last year. This was caused by a 10 per cent fall to £49m in its retail sales in the UK and Europe, while revenues on a like-for-like basis were down by a similar amount. However, Mr Marks, who is French Connection's chairman, as well as the retail group's chief executive, touted profit growth in North America and "booming" licence sales in India.
French Connection has so far only managed to exit two of the 15 under-performing UK stores it wants to offload. This has led Mr Marks to lambast retail landlords.
He added: "If you are a landlord you see someone with a very strong balance sheet [in French Connection], who is quite able to pay the rent. Landlords are then not as helpful as they are to someone who is going into a pre-pack administration. They [landlords] have still got their heads in the sand."
French Connection's rival, Inditex, the Spanish group behind Zara and Massimo Dutti, grew net profits by 32 per cent to €944m in its first half.Reuse content