French Connection sells Nicole Farhi brand for £5m

Retailer slumps to loss of nearly £9m after suffering 'very difficult' year

French Connection is to close most of its US operations and sell its Nicole Farhi brand, the fashion group said yesterday as it posted full-year losses of nearly £9m



But the retail and wholesale group touted a robust sales performance in the UK and Europe and said the overseas restructuring – which follows the closure of its Japanese and Scandinavia businesses – would see it return to profitability.

The Nicole Farhi business, which has lost money for a number of years, is being sold to the private equity firm OpenGate Capital for up to £5m.

The sale ends the business relationship between French Connection's founder and executive chairman, Stephen Marks, and Nicole Farhi herself, the mother of his daughter, Candice. Mr Marks first met Ms Farhi, who was an ambitious young designer at the time, in the early 1970s on a business trip to Paris, and she then started to freelance for him.

The couple launched the brand under French Connection's ownership in 1982 but ended their personal relationship at the end of the 1980s. Now grandparents, Mr Marks and Ms Farhi – who is now married to the playwright Sir David Hare – have remained good friends. Ms Farhi will remain creative director at the eponymous brand under its new owners.

The 23 Nicole Farhi stores and concessions in the UK will either be "transferred or closed", the company said.

Mr Marks yesterday said the strategic review which began in 2009 was now "complete". He added: "This has been a very difficult year, however, I am confident that the changes we have made will create a solid base for the development of the business and will enable the group to return to profitability in the near future."

For the year ended 31 January 2010, French Connection suffered a pre-tax loss of £8.7m, compared with an £11.8m loss last year. The group's performance has waned since 2004 when its former FCUK slogan reached the peak of its popularity. Its revenues flatlined at £214m last year.

French Connection is to close 17 of its 23 stores in the US at a one-off cost of about £6.5m, although this will lead to a £3.2m reduction in its annual losses. Neil Williams, the chief operating officer of French Connection, said: "We could not see the [US] stores returning to profitability in a reasonable time." French Connection's US business will now largely focus on wholesale, such as its offer in the Bloomingdale's department stores, and e-commerce.

In October, French Connection revealed it was to close its 21 Japanese stores, the last of which will close this week. However, Mr Williams said it was in discussion about re-entering the Japanese wholesale market.

The group said the total restructuring costs, including the closure of its US and Japanese business, would result in exceptional costs of £13.1m.

Last year, French Connection also closed its retail operations in Denmark and Sweden.

Over the year, French Connection's retained businesses in the UK and Europe delivered a 2.8 per cent uplift in underlying sales. But its womenswear business again outperformed menswear. Mr Williams said: "We have put a lot of effort getting the [menswear] product right and that is starting to come through." Toast, the group's upmarket fashion, homewares and accessories chain, posted total sales up 16 per cent over the year. Overall, French Connection's retained businesses made a pre-tax profit of £1m.

Mr Williams said that French Connection's wholesale orders for the autumn/winter season were ahead of the same period last year, which had not happened for three years.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Claims Administrator

£16000 - £18000 per annum: Recruitment Genius: A position has arisen within th...

Ashdown Group: Development Manager - Rickmansworth - £55k +15% bonus

£50000 - £63000 per annum + excellent benefits : Ashdown Group: IT Manager / D...

Recruitment Genius: Security Officer

£16500 per annum: Recruitment Genius: Applicants must hold a valid SIA Door Su...

Ashdown Group: Business Analyst - City, London

£50000 per annum: Ashdown Group: Business Analyst - Financial Services - The C...

Day In a Page

The saffron censorship that governs India: Why national pride and religious sentiment trump freedom of expression

The saffron censorship that governs India

Zareer Masani reveals why national pride and religious sentiment trump freedom of expression
Prince Charles' 'black spider' letters to be published 'within weeks'

Prince Charles' 'black spider' letters to be published 'within weeks'

Supreme Court rules Dominic Grieve's ministerial veto was invalid
Distressed Zayn Malik fans are cutting themselves - how did fandom get so dark?

How did fandom get so dark?

Grief over Zayn Malik's exit from One Direction seemed amusing until stories of mass 'cutting' emerged. Experts tell Gillian Orr the distress is real, and the girls need support
The galaxy collisions that shed light on unseen parallel Universe

The cosmic collisions that have shed light on unseen parallel Universe

Dark matter study gives scientists insight into mystery of space
The Swedes are adding a gender-neutral pronoun to their dictionary

Swedes introduce gender-neutral pronoun

Why, asks Simon Usborne, must English still struggle awkwardly with the likes of 's/he' and 'they'?
Disney's mega money-making formula: 'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan

Disney's mega money-making formula

'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan
Lobster has gone mainstream with supermarket bargains for £10 or less - but is it any good?

Lobster has gone mainstream

Anthea Gerrie, raised on meaty specimens from the waters around Maine, reveals how to cook up an affordable feast
Easter 2015: 14 best decorations

14 best Easter decorations

Get into the Easter spirit with our pick of accessories, ornaments and tableware
Paul Scholes column: Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season

Paul Scholes column

Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season
Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

The future of GM

The greenhouses where Monsanto 'plays God' with the future of the planet
Britain's mild winters could be numbered: why global warming is leaving UK chillier

Britain's mild winters could be numbered

Gulf Stream is slowing down faster than ever, scientists say
Government gives £250,000 to Independent appeal

Government gives £250,000 to Independent appeal

Donation brings total raised by Homeless Veterans campaign to at least £1.25m
Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

The most borrowed book at Bank of England library? Oh dear

The book's fifth edition is used for Edexcel exams
Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

Cowslips vs honeysuckle

It's the hunt for UK’s favourite wildflower
Child abuse scandal: Did a botched blackmail attempt by South African intelligence help Cyril Smith escape justice?

Did a botched blackmail attempt help Cyril Smith escape justice?

A fresh twist reveals the Liberal MP was targeted by the notorious South African intelligence agency Boss