French Connection announces Store Closures as Losses Mount

Posted on 21 September, 2015 by Kirsten Kennedy

Despite the upturn in the economy fashion has continued to lag behind in terms of recovery in the retail sector. For the vast majority this has seen profits climb only minimally, but others are facing a much more perilous situation – including French Connection, which has this week announced its intention to close more stores in the UK.

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During the first half of the year, the retailer saw pre-tax losses of £7.9 million, an even worse performance than in the first half of last year when the figure amounted to £3.9 million. Executives believed that a lukewarm response to its Spring collection was at fault, and have voiced a hope that the arrival of its Winter collection will effectively turn things round.

Unfortunately, though, this hope is not enough to sustain the retailer’s current number of outlets, with up to four store closures are in the pipeline as a means of reducing underlying operating expenses by 1.4 per cent per annum. This is in addition to the six closures undertaken during the first half of the year.

Chief executive of French Connection, Stephen Marks, hopes that the second half will bring with it a much-needed boost to sales.

He says; “We have made operational and personnel changes to drive improvements in performance, notably in both design and merchandising.

“Improved retail trading especially in recent weeks of our new Winter 15 collection, the continued growth of licensing, solid Spring 16 forward orders, and tight control of costs, are positive signs.

“We are pleased with the recent change of trajectory in UK/Europe retail performance, particularly given soft trading on the high street in August. Trading, however, is unpredictable, and we are as ever dependent on the Christmas selling period.”

Although the store closures will help to reduce operating costs, there is little guarantee that the move will turn the losses around, as during the first half like for like sales in stores open for more than a year fell by 10.7 per cent. Correspondingly, this caused wholesale revenues to fall by 9.8 per cent, totalling £75.8 million.

While a grand total of ten store closures in a year doesn’t exactly compare to the reduction programmes seen during the recession, it is disappointing for French Connection as it was only in March that it revealed losses had narrowed to just £800,000.

The current situation facing French Connection is a stark reminder to all retailers that, despite the economic recovery and upturn in consumer spending, complacency must be avoided in the current climate at all costs.




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