French Connection will leave its shop on London’s Regent Street and shut seven unprofitable stores as the lossmaking fashion brand accelerates its closure programme.
The company will vacate the shop on Regent Street – one of its biggest stores – in March at the request of the building’s owner. French Connection will receive £2.4m in compensation from the landlord, which plans to redevelop the site.
In a trading update, French Connection said the move would remove “ongoing trading losses of the store”.
The company’s shares, which had halved this year, surged 13% to 34.25p.
French Connection will also close three stores in the UK and four in the US by the end of its financial year in January. In April the company said it expected to close seven shops this year but 13 sites are now planned to close this year. At the end of July French Connection had 140 of its own shops and 254 franchised outlets.
The brand’s fortunes have waned since it caught the public’s attention with its FCUK logo in the 90s. It has battled to keep up with rivals such as Zara on the high street and Asos online in the fiercely competitive clothing retail market. French Connection lost £7.9m in the first half of the year after its spring designs failed to get tills ringing.
Stephen Marks, French Connection’s founder and chief executive, said performance had picked up and the winter collection was selling well. Sales at existing stores increased slightly in the 16 weeks to 21 November, having fallen by 6% a year earlier. Full-price like-for-like sales rose by about 6% and the gross profit margin improved as a result.
Marks, who set up the brand in 1972, said: “The performance of the group has improved considerably compared to the first half of the year, particularly in the UK and Europe retail stores. While we still have the all-important Christmas period to come, we expect the results for the full year to be in line with market expectations.”
Analysts at Numis Securities said French Connection’s performance was encouraging and that the extension of a licensing agreement with furniture store DFS was good news. They predict a full-year pre-tax loss of £4.5m compared with a loss of £800,000 last year.
This article was written by Sean Farrell, for theguardian.com on Monday 30th November 2015 08.58 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010