French Connection heads for China as UK toughens

French Connection revealed plans to break into China as it put up a defensive front in the face of a tough UK climate.

The retailer is intent on developing its overseas operations and has established a joint venture with its partner in Hong Kong, which already has stores in China. A Shanghai shop is likely to open next year.

The news came on the back of 'disappointing' UK retail performance. Retail like-for-like sales fell 9.5 per cent in the six months to July 31.

However, group sales grew by 5 per cent to£128.2 million. Pre-tax profit was up 12 per cent to£15.4 million.

The retailer has reiterated its allegiance to the FCUK brand, which continues to be used for products, stores and advertising.

French Connection founder and chief executive Stephen Marks cited a slowdown in consumer spend and strong comparatives as reasons for the like-for-like slump.

'Last summer (2003) was the best we have had in 20 years,' Marks said.

He also warned that trading conditions continue to be uncertain, but that the general outlook was promising. 'There are lots of legs in our business,' he said.

The company's income from licensing grew by 43 per cent in the period.

FCUK's new toiletries ranges also will be sold in Boots. The wholesale and mail order businesses also performed well.

Broker Numis noted: 'The biggest downside to forecasts is if UK retail does not recover in autumn/winter. However, August has seen particularly tough trading and the market was unusually poor in terms of weather patterns. To us, today's results reiterate how defensive this group is.'