French Connection, the British clothing retailer, has released its interim results for the first half of the year, revealing a bleak outlook for the company. The ongoing pandemic has heavily impacted the majority of its trading period, which ended on July 31. As a result, French Connection experienced a significant decline in revenues, with a staggering decrease of 53.1% to £23.9 million compared to the previous year. Additionally, the company reported an underlying loss of £12.2 million, a substantial increase from the £3.6 million loss in the same period last year.

The sharp decline in sales, coupled with subsequent stock provisions, were the primary contributors to the increased loss. Wholesale revenues suffered a 49.3% drop due to the closure of customers’ stores in all regions, although there were some deliveries to online stores. Retail revenues suffered an even greater blow, plummeting by 57.6% to just £10.1 million. This decline can be attributed to the lockdown measures implemented during the first half of the year and the permanent closure of nine retail locations as part of the company’s store rationalization program.

The company’s gross margins were negatively impacted by the loss of full-price selling opportunities during lockdown, as well as an increase in older stock remaining at the end of the period. However, French Connection was able to capitalize on e-commerce opportunities during the lockdown, resulting in an 8.1% rise in online sales for the six-month period. Despite experiencing a significant drop in business in the initial weeks of the lockdown, the company managed to recover and saw continuous growth in online sales. This growth can be attributed to the development of the website’s functionality and effective marketing strategies, which are expected to contribute to further growth in the second half of the year.

French Connection stated that its current trading is in line with its expectations. While no specific figures were provided, it is evident that the company is still grappling with the impact of the pandemic. Sales have gradually increased since the re-opening of its stores, but they have recently been affected by renewed lockdown measures in certain parts of the UK. However, the company mentioned that its wholesale customers in the UK are showing more confidence, as evidenced by increased orders for winter goods, particularly in the casual product category. On the other hand, department stores in the US have been more cautious and have only recently started ordering winter goods.

Despite facing a challenging trading period, French Connection received positive feedback on its Summer 21 collection from customers. Chairman and CEO Stephen Marks acknowledged that this had been the most difficult trading period the company had ever faced. However, he expressed confidence in the company’s ability to navigate uncertain consumer demand and capitalize on opportunities. French Connection managed to secure £15 million in financing, which it believes will be sufficient even in a worst-case scenario.

It is clear that French Connection, like many other retailers, has been severely impacted by the coronavirus pandemic. The uncertainty surrounding consumer demand and the ongoing restrictions pose significant challenges. However, with a strategic focus on e-commerce and a tight control of costs, the company aims to overcome these obstacles and emerge successfully from this crisis.

Useful Links:
1. French Connection Official Website
2. Retail Gazette – Retail Industry News