French Connection crashes after blunder over fashions

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The Independent Online

French Connection, the high street retailer, yesterday blamed its own poor fashion nous for a swingeing profit warning that wiped almost one-fifth off the value of the company.

French Connection, the high street retailer, yesterday blamed its own poor fashion nous for a swingeing profit warning that wiped almost one-fifth off the value of the company.

The group admitted it had let down its customers by not stocking enough fashionable clothes. Its like-for-like sales across its core UK estate plunged 18 per cent in the past three months.

The fashion blunder comes just five months after Stephen Marks, the group's founder and chairman, raised £36.5m from selling 9 million shares in the company at 410p - just off a record high. Yesterday the shares plunged 50p to 255p, hitting their lowest level in more than 12 months.

Mr Marks said he needed the cash to settle a costly divorce settlement with his former wife, Alisa. He insisted the timing of his sale was dictated by the divorce courts, not by him. "Winter clothes were not even close to the shops in June. We had a record winter order book," he said, adding: "We didn't think we'd have a problem."

French Connection warned that this autumn's sales shortfall meant its profits would be "significantly" below City expectations. It said pre-tax profits would be 15 per cent below last year's, prompting analysts to cut their forecasts by £10m to £33m.

The first sign that something was amiss with the group came in September. Despite reporting a strong rise in interim profits, it revealed that underlying sales had plummeted by 9.5 per cent in its first half. Its autumn fashion ranges were slated by the industry press, with the influential Drapers Record condemning the collection as "off-trend and out of season". Worse, the magazine added: "It looks like Gap three seasons ago."

Asked what its customers wanted from French Connection, Mr Marks said: "Fashionable clothing." But rather than stock this season's key trends - tweed pencil skirts and diamante-trimmed cardigans - Mr Marks said the group's hapless buyers had opted for "too many V-necks and not enough ponchos".

The group denied that its controversial FCUK logo - recently branded "tired and tacky" by one wholesale buyer - was putting people off. Neil Williams, the chief operating officer, said: "We don't fundamentally think this is an FCUK brand thing. We are more concerned that the autumn collection wasn't fashion forward enough."

French Connection's woes unnerved the retail sector as the clock ticked down on its most important trading period. Mr Marks said: "One assumes the market is tough but it could just be us. We have taken it on the chin and said we got it wrong." He has "dealt with" the buying team responsible and poached a new merchandise director, Richard Grainger, from Next.

Analysts were divided about the retailer's prospects. Iain McDonald, at Numis Securities, took heart from the group's assertions that the wholesale orders for the new spring collection were ahead of last year. He said: "This gives some credence to management's view that this is a one-off ranging error." But Nick Bubb, at Evolution Beeson Gregory, said: "We recall they said much the same thing about this autumn's range. Management credibility is low." Mark Charnock, at Investec Securities, said: "The issue is whether this may be the start of a wider, brand-related malaise."

In order to raise enough cash for his £50m divorce settlement, Mr Marks was forced to give up control of the company he founded in 1972 with his then partner, Nicole Farhi. His stake fell from 51 per cent to 42 per cent. The profits warning lopped £20m off the value of his shareholding, trimming it to £102m.

The group said it had strengthened its spring ranges, due to hit the high street in late January.

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