UPDATED: French Connection '˜very close' to returning to profit
Retailer French Connection has said it is 'very close' to returning to profit, but continues to shut stores and said Britain's battered high street would remain under pressure.
The fashion chain saw annual pre-tax losses nearly halve to £2.3 million from £5.3 million the previous year as it axed loss-making stores and overhauled ranges.
On an underlying basis, its operating losses narrowed to just £600,000, down from £3.7 million the previous year.
Shares surged 16% after the results.
Retail like-for-like sales grew 0.8% over the year to January 31 in a “particularly challenging” UK retail market - a marked slowdown on the 4.4% rise seen the previous year.
An 8.6% surge in wholesale revenues helped boost overall group sales, up 0.5% to £154 million.
French Connection said there was unlikely to be any let-up in the tough trading hammering British retailers, but put faith in its ongoing turnaround plans and store overhaul to help it weather the storm.
Chairman and chief executive Stephen Marks said: “Our goal has been to return the group to profitability and I believe we are very close to achieving that aim, given the momentum that we are currently seeing within the business.
“While it is clear that the retail market in which we are operating in the UK is unlikely to improve in the near future, we have clear visibility on the benefits we will obtain from the ongoing portfolio rationalisation.”
The group also revealed it received an unwanted takeover approach from an unnamed US suitor last year, but said it did not lead to a formal offer despite months of talks.
French Connection closed 11 stores and concessions over the last financial year and said it would continue to axe unprofitable sites, with an ultimate aim to have around 30 full-price stores by the end of next January.
This is down from 65 full-price stores in 2013 and around 36 currently.
Overall, the group has 116 stores and concessions and a further 212 franchised outlets - down by 6.5% and 26% respectively over the past financial year.
However, it opened its first new store in years in Manchester last November as part of its strategy to open bricks and mortar sites in “appropriate locations” that will “trade profitably”.
Mr Marks, who launched the business 44 years ago and holds a 41% stake, has been leading an overhaul to revive French Connection’s fortunes after it struggled to compete with fast-fashion brands such as ASOS and Zara.