French Connection warned first-half operating profits would be £7m lower than last year as it resorted to additional discounting

The retailer revealed that sales dropped 7% in the six months to July 31 and its gross margin was lower than last year because of additional discounting.

The fashion retailer said initial reaction to its winter range had been “encouraging” but it was “very cautious” in its outlook for the second half in light of the first six months.

French Connection is currently undertaking a “thorough review” of its UK and European retail operation. It has began in-store trials to improve the customer proposition and experience.

The retailer’s wholesale orders in the UK and Europe were “slightly below” last year’s levels, although growth in North America offset the decline to some extent. 

Sears has ended its supply agreement with the retailer for its ‘UK Style by French Connection’ products, which had generated £1.9m in its last financial year. However, French Connection said a number of new licensing opportunities are being developed including for the kidswear range and for shoes.