You know a business is in trouble when it feels the need to warn investors about underperformance barely one month after releasing already disappointing full year results. French Connection, the retailer that triumphantly gave one big FCUK to the 90s, has announced its first half revenues will be ‘materially lower than expected’.
In March, the firm reported a 4% fall in full year revenues to £189.4m, saying it had shut ten underperforming stores in 2014. It had cut its annual loss by 81% to £800,000, however, and had hoped it would get out of the red once the disappointingly warm winter was over.
Instead, French Connection said the ‘challenging conditions’ had continued past Easter. Black clearly isn’t in this year, then. The firm also said its full year financial performance is also likely to be below market expectations – hence the share price fall.
The business has been in the doldrums since the dark days of 2008, when it made a £17m loss (things could be worse, eh?), and its shares have lost over half their value since May last year.
But there is a glimmer of hope for French Connection, in all this. Its wholesale business in department stores and the like saw revenues rise last year, and so far this year is performing ‘in line with expectations, with forward orders up year on year’. At present, this side of the business accounts for 40% of group revenue. With seven more stores expected to close in 2015, one has to assume that percentage will only increase.