As consumer confidence continues to improve and real wages slowly begin to creep up, the retail industry has benefited from a surprisingly strong rise in profitability. However, while chains such as John Lewis and Home Retail Group’s subsidiaries Argos and Homebase are now consistently posting excellent results, the future remains uncertain for those retailers which have not altered their strategies to meet the expectations of post-recession consumers.
Until this week, fashion brand French Connection was expected to be one of the casualties of the Christmas trading period. The chain has struggled since it peaked with the FCUK logo 10 years ago, with rising competition and an onslaught of online retailers pushing the once-dominant brand into the shadows. This led to some industry experts predicting that the company could be forced to issue yet another profits warning.
However, French Connection surprised many with the news that its losses for the financial year will be much lower than expected after a strong December and January of trading. Analysts forecast losses to amount to around £5.7 million, but the firm revealed in an unscheduled stock market trading report that they are likely to fall closer to the £4.7 million mark.
As last year’s losses came in at £7.3 million, this is a clear indication that the turnaround plan implemented by founder Stephen Marks – who late last year launched an outspoken attack on business rates and commercial property rents – is beginning to pay dividends.
The main focus of the turnaround plan has led to the closure of a number of branches whilst simultaneously revamping the clothing line to make it more appealing to the modern consumer.
As for the stores which have remained open, they are now much brighter, follow a minimalist design ethos and are linked to the brand’s website in order to give consumers further information about products on the spot.
After three profits warnings were released in two consecutive years, there were some who doubted whether French Connection could remain a presence on the high street and expected the brand to follow once-popular names such as La Senza into administration. Fortunately, it seems that Mr Marks’s overhaul has succeeded in turning the fortunes of the brand around.
