Troubled French Connection issues third profits warning

The fashion chain French Connection issued its third profits warning in seven months yesterday as it said sales in its UK shops slumped by 12 per cent in the first three months of the year.

Shares in the group – founded by the chief executive, Stephen Marks, in 1972 – collapsed, falling 9.5p or 24 per cent to a two and a half year low of 30p.

Mr Marks said: "The UK retail market remains particularly challenging and the combination of prevailing consumer caution and ongoing economic difficulties suggests that this will not improve in the second half of the year. We therefore remain cautious about the outlook for the rest of the financial year."

Analysts slashed their profit forecasts for the year to next January from £3m to £4m to a loss of £5m. Last year the business made a £5m profit despite the UK stores losing £8.2m.

French Connection said the review of its UK and European retail operations, launched in March, had been accelerated with the appointment of external consultants. It is expected to close up to a fifth of its 72 stores in Britain as a result of the review.