FCUK's sales suffer serious blow after lesbian fight ad

First their customers hated being sworn at; now it seems they aren't too partial to images of lesbianism and fisticuffs.

French Connection, the retailer that shocked shoppers with its FCUK-prefixed advertising slogan, has seen a further collapse in sales and profits just weeks after its latest television advert provoked howls of outrage from offended viewers.

The violence and sexual imagery portrayed in the video that showed two women beating each other up before being soaked with water and then embracing has failed to entice customers back to French Connection's stores. At its annual shareholder meeting, the group admitted that profits would again miss forecasts.

Yesterday was the sixth time that City analysts have slashed their profit expectations for the company since Stephen Marks, the chairman and chief executive, raised £36.5m from selling 9 million shares. Mr Marks, who founded the company more than three decades ago, raised the cash to fund his divorce settlement with his ex-wife, Alisa. The group's shares, which were worth more than £4 when he sold them, fell to 211p after its profit warning.

The two women fighting in French Connection's latest campaign, which is plastered over the side of London buses and taxis, are meant to represent a quote from Yves Saint Laurent, the French designer, who once said: "Fashion fades, style is eternal." The battle pits fashion against style; the reconciliatory kiss suggests that neither wins.

The ad was dreamt up by Trevor Beattie, the ad man who turned the retailer's FCUK acronym, which it used at the top of letterheads when faxing its buying office in Hong Kong, into one of the industry's most controversial campaigns.

Retail analysts blamed part of the recent sales decline on the campaign. Matthew McEachran, at Investec Securities, said: "I personally had no inclination to go anywhere near a store after I saw that advert. The video looked cheap and not very design-led." Nick Bubb, at Evolution Group, said: "It left me confused."

Despite the latest trading disappointment, executives at French Connection are understood to be pleased that the ad created so much fuss. If nothing else it has boosted the brand's profile after poor designs and high prices saw it fall off the fashion map. Mr McEachran added: "The campaign has been a talking point and they regard it as a good starting point."

Mr Marks said that trading over the Easter period "was difficult and did not meet our expectations". In the group's UK stores that have been open for more than one year sales have fallen by 2 per cent since the beginning of February. Sales of its summer ranges to department stores remains "subdued", while orders for its winter lines are 12 per cent below the level achieved last year, he added. Even its US stores have disappointed suggesting more than just tacky advertising has turned customers off the brand.

Despite being only weeks into its new financial years, which runs to January 2007, Mr Marks said: "There is little indication at the moment that the market conditions or our trading performance will change... [so] we are materially reducing our expectations for full-year results." City analysts now expect the company to manage pre-tax profits of just £6m, compared with the £38m it made just three years ago.

Although the fashion press has raved about some of French Connection's recent pieces, many customers still think its ranges are uninspiring and overpriced. Mr Marks refuses to acknowledge that his main rivals are cheap-yet-chic retailers such as New Look, preferring instead to compare his company to smaller, boutique-ish chains such as Whistles.

The group stopped plastering FCUK all over its clothes and stores some time ago. It is likely, however, that the "fashion Vs style" moniker is here to stay.

Other advertising campaigns that backfired

J Sainsbury

Hard to believe, given the supermarket chain's love-in with celebrity chef Jamie Oliver, who has a Delia Smith-like effect on the goods he advertises. But Sainsbury's got it spectacularly wrong with a campaign starring John Cleese in 1999. Their Home Counties customers hated the brash "Value to Shout About" strap line. The campaign almost ruined Sainsbury's reputation for quality.

Marks & Spencer

At the height of the retailer's woes, it launched its first-ever television advertising campaign. The ads featured a naked size-16 woman called Amy Davis shouting "I'm normal!" from a hilltop. The viewing public were unimpressed and the campaign only hastened the group's decline. For its latest offering it chose well-known models, such as Twiggy and Laura Bailey. They keep their clothes on.

Strand Cigarettes

The attempt in the 1960s to sell cigarettes with the image of a man smoking alone under the tag line "You're never alone with a Strand" went down as possibly the worst campaign of all time. Smokers did not want to see themselves as the melancholic "Billy-no-mates" type depicted in the ad, and it effectively killed off the brand, which was part of Imperial Tobacco's stable at the time.

Kingsmill Bread

Elvis Presley may have been the King of rock 'n' roll but executives at Associated British Foods must have forgotten he was also the king of fried peanut butter sandwiches when they commissioned a TV ad featuring Elvis to sell Kingsmill bread. Given that his snack of choice helped to hasten his early end, using Elvis as a bread figurehead did nothing for sales and the campaign was recently axed.