French Connection warns of second half dip after poor menswear sales

French Connection continued the gloom on the high street yesterday as it warned of lower sales in the second half, following poor performances at its menswear division and its upmarket mail order brand Toast.

However, the fashion retailer's womenswear division enjoyed like-for-like sales growth of 6 per cent, after the company focused on improving the design and quality of the range. The design team is currently tackling menswear.

Overall, like-for-like sales fell 1.6 per cent. In recent weeks, like-for-like sales were down by as much as 5 per cent overall.

Chairman Stephen Marks said the company had "made progress over the last six months, with an improved financial performance and continue growth in French Connection ladieswear sales despite the widely-reported difficult trading environment in the UK".

He added: "Other areas of our business continue to receive close attention in order to replicate this success." New menswear ranges were being developed, he said, while Toast was concentrating on next summer's collection.

In the six months to the end of July, group sales fell from £111.2m to £109.4m, but cost cutting meant the pre-tax loss was reduced from £3.6m to £2.5m. Following a slump in early trading, shares remained flat on the day at 172p.

The group makes the majority of its profits in the Christmas period. Last year, pre-tax profits came in at £7.6m in the second half and Mr Marks said he hopes to better this in the current year.

But analysts downgraded their forecasts. Louise Richardson, at Arden Partners, said "overall the results are disappointing", while analysts at Panmure Gordon said they expected pre-tax profits forecasts for the year to come down to £5.6m from £8.6m.

"Current trade is in line with Next's but had been better and this is what is driving the likely profit downgrade," Philip Dorgan, at Panmure Gordon, said.

In North America, like-for-like retail sales rose 8 per cent, but the effect of the weak dollar meant that sales fell in sterling terms.