Founded in 1972, British fashion retailer French Connection Group Plc produces and distributes branded fashion clothing for men and women to more than 50 countries around the world. However, now French Connection is faced with a big challenge.
This Tuesday French Connection reported its fifth consecutive year of loss and Gatemore Capital Management holds an 8% share in French Connection and has called for the break-up after “disappointing” results. Gatemore Capital holds that French Connection should consider separating its retail and licensing businesses among other options.
French Connection has been struggling to compete with other fast fashion rivals, such as Ted Baker, Inditex’s Zara, Karen Miller, and Reiss. In recent years, because of the fierce competition, the sales of French Connection dropped sharply and its market share shrank. French Connection said its pretax loss including store disposals and closures in the year to Jan 31 was 5.3 million pounds ($6.4 million) versus a loss of GBP3.5 million a year earlier. Revenue fell 6.7%, or by 10% on a constant currency basis, to GBP153.2 million.
Industry experts believe that due to poor performance over several years, French Connection is facing great pressure. Although they adopted measures which included closing stores and replacing the management and design team strategy, it is difficult for them to get out of such a bad situation quickly enough.
Chief executive Stephen Marks
The pressure on French Connection’s chairman and chief executive Stephen Marks keeps growing, but he still holds a positive attitude, saying “It is early in the year and we have a considerable amount of work to do to take the group back to profitability, though I believe the actions we have taken and continue to take, will go a long way to achieving our goal this year.”
Sources:
https://www.theguardian.com/business/2016/mar/15/french-connection-annual-loss-shares-slump
http://www.telegraph.co.uk/business/2017/03/14/french-connection-reports-loss-fifth-year-row/
http://www.marketwatch.com/story/french-connection-loss-widens-trading-picks-up-2017-03-14
