French Connection is to review its retail operation following a profits plunge in its full year.

Chief executive and chairman of the retailer Stephen Marks said it was conducting the review following the most difficult winter season he had seen in all of his years in the business. Its UK and European retail business made a £8.2m loss in the year.

He said: “We are very aware that there will be no quick solutions and that changes we make will take time to have an impact. We are working very hard on improving the performance of the retail stores, although clearly the state of the UK economy is not helping the position.”

In its full year to January 31, profits plunged 32% to £5m against a 5% sales rise to £215.4m. Group gross margin plummeted 390 basis points to 48.1%. The decline in its UK and European retail business accounted for a 220 basis point drop.

Marks said: “Our UK retail division has been very disappointing and this has had a significant effect on our results for the year.”

The French Connection boss said that he expected the UK retail environment to remain subdued over the next twelve months.

It has added a new premium range to stores and is to launch homewares in larger stores and online in April.

The retailer’s European and wholesale channel grew 17%, albeit with a lower gross margin.

Its wholesale division performed well over the year, growing 17% in the UK and Europe.

Marks expects to see further growth in wholesale and international in its current financial year, after it broke into profit in North America last year