French Connection works on turnaround after slipping into red
French Connection's chief executive has admitted its products have "not been up to scratch" in the past year after the fashion retailer crashed to a half-year loss and its shares tumbled.
Following a review of its retail business, Stephen Marks said the chain had started to ring in the changes after a "very difficult" six months.
It has hired a new head of womenswear design and a new retail managing director, sharpened up its buying practices and is 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 also has stores in the US, India and China, posted a loss of £6.3m over the six months to 31 July, from 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 also French Connection's chairman, touted profit growth in North America and "booming" licence sales in India.
French Connection has managed to exit only two of the 15 underperforming UK stores it wants to offload, and Mr Marks had scathing words for some landlords.
"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," he said. "Landlords are then not as helpful as they are to someone who is going into a pre-pack administration. They have still got their heads in the sand."
Separately, Inditex, the Spanish group behind the Zara and Massimo Dutti chains, continues to power ahead, with net profits up 32 per cent to €944m (£760m) in its first half, on revenues up 17 per cent to €7.24bn.
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