French Connection has issued a profit warning, downgrading its pretax profit from £5m for the year January 31 to £4.7m, which includes a one-off exchange gain of £700,000.
The fashion retailer revealed it closed the year with £33m net cash and no debt.
French Connection suffered in the run-up to Christmas as the warm weather impacted sales of winter warmers and knitwear. Llike-for-like sales plunged 9.5%.
When it posted its third quarter results in November, the retailer said it expected stronger sales across December and January than last year, but warned “it is unlikely that the shortfall so far will be fully recovered”.
Today, the retailer said this “disappointing” trading continued through Christmas.
“The effect of this has been to negate the growth in like-for-like sales achieved in the first half of the year and to cause the gross margin to be lower than expected,” it added.
It said international operations and brand licensing partners remain strong performers and wholesale deliveries in the second half of the year have shown “good growth over the previous year”, while forward orders for Spring/Summer have exceeded the same period last year.
According to a retail analyst, the pressure appears to be on margins rather than falling sales. “The stores were still massively discounting when others on the high street had launched their spring/summer collections,” he said.