French Connection, the beleaguered fashion retailer, has released its full-year results for the period ending January, shedding light on the significant impact of the ongoing pandemic on its business. The company experienced a striking drop in revenue, plummeting over 40% to £71.5 million, and reported an underlying loss of £11.7 million. These figures were driven by a decline in sales and the need for additional one-off stock provisions, despite implementing cost reductions across all areas of the company.

Operating profitability also took a hit across all geographic regions, with the UK/Europe loss widening to £5.8 million and the North America profit decreasing to £1.1 million. The Rest of the World segment also contributed to a loss, albeit slightly worse than the previous year.

Although French Connection has faced significant challenges, there are glimmers of hope for the future. Wholesale revenues fell 33.1% to £49 million, primarily due to the impact of the initial national lockdown. However, online customers in the UK demonstrated strong performance in the latter half of the year, aiding wholesale in the country. This was largely attributed to customers with robust e-commerce propositions.

On the other hand, retail revenues plummeted by 51.8% to £22.5 million, predominantly due to store closures and low footfall during periods when shops were open. Despite this, online sales experienced a 7.1% increase, driven primarily by casual clothing and homewares.

Gross margins were negatively affected by the loss of full-price selling periods during lockdowns and higher levels of residual stock. The store portfolio was closed for a total of 21 weeks throughout the year, resulting in significantly decreased trading compared to the previous year — particularly during the critical Christmas period. Additionally, 14 locations, including stores and concessions, were permanently closed.

Acknowledging the challenging year, Chairman and CEO Stephen Marks highlighted the promising recovery of the wholesale business in both the UK and USA. He also expressed satisfaction with the growth in e-commerce sales and the positive sales performance following the initial national lockdown. Marks underscored the importance of allowing sufficient time to assess the speed of recovery in the coming months for both their stores and wholesale customers.

Looking towards the future, French Connection remains optimistic about the current orders for the upcoming summer and winter seasons, which indicate a solid start to the new financial year and a potential return to previous levels of performance. The company believes it is moving in the right direction and remains committed to stabilizing the business and securing new financing.

Useful links:
1. French Connection Official Website
2. Retail Gazette – Retail News and Analysis