Brainfood: Behind the spin - fcuk


Last Updated: 31 Aug 2010

French Connection is not the brand it once was. The in-your-face fashion retailer, founded in 1969, was known for its high-fashion designs, but it seems to have lost its way. Year-on-year sales to the end of January 2005 were down 12% and profits before tax fell 15% - the first drop for nine years. Stephen Marks, the company's founder, chief executive and chairman, blamed the poor performance on an ill-judged range and a bottoming-out of the market. The first weeks of the new financial year proved no better, with like-for-like sales down 17%. The group also owns designer Nicole Farhi and has a 75% stake in mail-order company Toast.


Marks attributed the company's recent disappointing figures to its autumn/winter collection, which he described as having 'too many basics and not enough fashionable product'. He remains bullish about the group's future and called the recent troubles no more than a blip, confident that the spring/summer ranges will sell well. He has boosted the buying team, but vented some of his frustration at an over-critical press: 'We are undervalued. We get no credit for running this business well for nine years, for making £33 million profit and having £52 million in the bank. All we get is everyone slagging us off.'


The City is worried that the company has lost its magic touch, with some calling its long-running FCUK ad campaign tired and tacky. Marks explained: 'What happened is that we stayed static too long and relied on our previous successes and then we got caught out.' He pointed out that the FCUK-branded T-shirt was the company's best seller and that the updated branding was selling well. But analysts remain cautious: Richard Ratner of broker Seymour Pierce told the Financial Times that it would take time for customers to return and forecast a 'pretty grim' first half. The company has already dropped out of the FTSE-250.


There is hope - Marks is an experienced retailer and many are confident he will turn the company around. Says Ratner: 'French Connection is in an area of retail aspirational fashion that is doing relatively well. If and when it gets the fashions right, we should see a scramble back into the shares.' Persistent rumours of a buyout by Baugur have been denied. The Icelandic retailer recently acquired a 1.5% stake in the business following Marks' decision to sell some of his 56% stake to fund his £40 million divorce.

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