French Connection’s “disappointing” first quarter results to May 17 have led to a third profit warning for the fashion retailer in the past seven months, with analysts downgrading group profit for the year to a loss of £0.5m from a profit of £4.7m.

Retail Week speaks to finance director Roy Naismith to find out how the business review is progressing.

Retail Week: How do you feel about the first quarter performance?

Roy Naismith: The results are definitely a bit disappointing. It has been tough broadly across the UK but also specifically in French Connection and we need to take responsibility .

It is only three months in to the new year and it’s hard to see those numbers but we’re trying to be conservative with guidance. We don’t see a reason why the economic situation will pick up, although some other retailers have mentioned events like the Olympics and Jubilee making a difference. Also we do need to deal with the bigger issue.

Last year we had some good numbers in the first quarter because it was nicer weather and there was the royal wedding, which delivered like-for-likes up 4% so we were up against a tough number.

But there is also reticence from customers to spend on the high street. We tend to stay at full price during seasons, so those competitors that are marking down are attracting that customer. We don’t want to undercut our wholesale customers [by discounting].

Our position in the market is as an upper-middle end retailer where we want to put quality into the products that justify the price points.

Having said that the review is very broad-ranging and we are letting ourselves to take a step back [and look at everything].

Everything is up for grabs be it brand awareness, quality of the product, store footprint, distribution channels – there is no silver bullet. Everything needs to be done better and possibly in a different way.

But we won’t second guess the review.

What short term changes are you making?

We don’t know yet.

We have already introduced things such as the premium range - which has gone down very well – the homewares range, which is also going well and we are looking at marketing.

We are currently looking at collections for Winter 2012 and Spring 2013 too.

Are you cutting costs out of the business and where?

Costs are always extremely important but we took a lot of cost out of the business in 2008 and 2009, which we hoped we wouldn’t need to do again. There are no specific plans to make cuts and I feel that we are trading reasonably lean at the moment.

It was reported that 14 French Connection stores were under review out of its 71-strong estate – what are your plans for the store portfolio?

Some of those stores have been on that list for a while. They are 14 stores that don’t perform as well as we would like them to. It is not going to happen that all 14 stores will close but we are prepared to have a smaller store footprint. Right now we have no active plans to close any of the stores.

We are actively managing the retail portfolio and if there are stores that don’t work for us and someone else would like to take the lease off our hands then it is an easy decision.

We look at the stores on their own merit, such as those coming to the end of their lease and we will talk to the landlords and see if they are prepared to negotiate on terms.

We are looking at relocations, downsizing and exiting.

In an ideal world if French Connection could choose the best number of stores for the UK retail division, what would that be?

We would easily be able to justify 50 to 60 stores if we were to start from zero today and I’m sure we would have stores located in places different to where they are now, if that were possible.

How long do you think it will take to turn around French Connection in the UK?

We want to turn the UK around as quickly as possible but because there is no silver bullet it is likely to take some time. But equally we are still looking at what we can do in that time such as looking at future collections.  

Our designers are always informed by where they see fashion going and what they can offer customers in terms of the French Connection hand writing, as well as what went on in the previous year. But we cannot second-guess the weather and like any retailer we will look at what we are good at doing.

There are limited opportunities for quick fixes but we can’t just turn it on.