French Connection plunged in to the red in the six months to July 31 as the retailer revealed the outcome of its strategic review.

The fashion retailer made a pre-tax loss of £6.3m against a pre-tax profit of £700,000 in the same period last year.

Revenue fell from £102.8m to £96m as its retail arm suffered.

French Connection chairman and chief executive Stephen Marks said: “The last six months have continued to be very difficult for French Connection’s UK/Europe retail business which has had an impact on the group results for the period.

“We have completed our extensive review of the retail business and have implemented a set of detailed initiatives across a broad number of fronts designed to improve the performance of the retail division and the business in general.”

Initiatives include to:

  •   Develop better selling skills and improve customer service to increase basket size and average transaction values
  •   Develop our ranges to better meet the aspirations of our core customers
  •   Ensure product pricing matches customers’ value perceptions
  •   Implement a more carefully structured approach to buying
  •   Improve reaction speed to best-selling lines and changing trends
  •   Target the disposal of loss making stores where economically viable

Marks added: “The operational focus of the initiatives is on improving our store operations, developing our product offering and improving merchandise management.

“In addition we have strengthened our senior management team and will continue to target the disposal of loss making stores. We are confident that these actions will produce a growing positive impact on our trading performance over the next two financial years.

“We are not expecting any improvement in the UK retail trading environment in the second half of the year and while it is too early to expect any significant impactfrom the results of our retail review we are making every effort to drive revenue and protect the gross margin while controlling costs very tightly.

“We recognise that the route to sustained recovery is likely to take some time, however we are committed to building on French Connection’s core strengths; our highly recognised and well-regarded brand, our long history of producing desirable, fashion forward products, our proven sourcing ability and, of course, the commitment and passion of our staff, whom I thank for their continuing hard work.”

Gross margin was down 2.3% to 47.7% as the retailer ramped up the level of promotions in the retail arm.

Outside of the UK, the performance of the rest of the group was “more encouraging”, with growth in revenue and profit in North America, and “solid performances” from the rest of the world business and Asian joint ventures.

French Connection’s e-commerce business has “continued to perform well and has grown significantly”. The retailer will continue to invest in the channel, and will launch initiatives including click-and-collect in the second half.