The French Connection brand has received a huge boost in the past year thanks to the controversial f.c.u.k. advertising campaign which various parts of Middle England tried to ban. The group increased its advertising budget to pounds 1.5m to back it and recouped most of the money through the sale of 100,000 T-shirts sporting the cheeky slogan.
This fed through to strong growth in the UK, where like for like sales increased by 15 per cent and profits doubled to pounds 3.5m. This is a creditable performance on a fragile high street where even the likes of Next have stumbled.
The strong performance of the two brands pushed full year profits up from pounds 6.2m to pounds 8.2m and the shares rose 25p to a new high of 427.5p. They were languishing at around the 150p mark just two years ago.
The first half of the current year will be affected by expansion work at two key London stores but these should make an enhanced contribution in the second half. The group is also expanding significantly this year with a pounds 10m capital expenditure programme which will see a further six shops added this year in locations like Bristol, Glasgow and Leeds as well as six more concessions. A test store has also opened in Canada.
On NatWest Securities' forecasts of pounds 9.5m the shares trade on a forward rating of 14. That is not too demanding but fashion is a volatile business and the shares have had a good run. Hold.