Dark days for French Connection: big loss expected

Fashion retailer French Connection UK is expecting to reveal a significant loss for the final quarter of 2012 after Christmas sales were hurt.

by Michael Northcott
Last Updated: 19 Aug 2013

But in this instance, unlike with other retailers that simply had a bad run, French Connection is likely to blame a bad piece of strategy. Despite aggressive discounting from online competitors, the firm decided to delay its own discounting over the key Christmas sale period to protect margins.

It seems this was a catastrophic decision, as lower demand from consumers and the continued promotional activity of the competition drew people out of its stores. The firm explained that like-for-like sales in the 24 weeks to 12th January fell by 2.9% compared with a year earlier, and said 1.9% of that was due to a late start on its sale. 

The store is reportedly expecting to make a loss of around £8m for the full financial year, considerably more than the £5m loss it made the previous year. The chain’s full-year results are not due until 13th March, but similar tactics in the US are expected to yield similar results.

Shareholders are obviously rattled by the warning, too, as shares were down 11% to 26.81 pence in early trading on Wednesday, and given that they have already fallen 25% in the last year, it’s not looking like a good bet to ‘hold’.

At MT, we can see why bosses wanted to try and protect margins, but when battling the influence of low-cost online competitors such as ASOS, perhaps Christmas was not the time to do it. 

And with losses bigger this year than last, we can imagine bosses saying: ‘FCUK, what a mess.’ 

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Upcoming Events

Latest on MT

The business of golf has landed in the rough

The business of golf has landed in the rough

EDITOR'S BLOG: Adidas and Nike are getting out after conditions turned sub-par.

5 point guide to safeguarding your business

5 point guide to safeguarding your business

SPONSORED: Beef up your data security with these top tips.

Cheat sheet: restore your company's reputation

Cheat sheet: restore your company's reputation

The much maligned Sports Direct is opening its doors to the public. How else can you regain your good name?

Uber drivers and cabbies are both set for the scrapheap

Uber drivers and cabbies are both set for the scrapheap

One day the fierce rivalry on London's roads will be consigned to history by self-driving cabs.

Should CEOs resign after a personal scandal?

Should CEOs resign after a personal scandal?

Antonio Horta-Osorio says he won't quit Lloyds after The Sun labels him a 'love rat'.

Was Virgin Trains right to call out Jeremy Corbyn?

Was Virgin Trains right to call out Jeremy Corbyn?

Attacking politicians is seldom a good idea, no matter how far from power they seem.