The French Connection group designs its own range of high-fashion clothing and operates retail stores and concessions in the UK and Europe.
It wholesales to retailers in over 50 countries around the globe and has licensed partners operating 160 or so stores across Asia, Australia and the Middle East.
French Connection has been desperately trying to rebase its retail operations – internationally as well as in the UK – around a smaller, more profitable store base and grow its wholesale business.
It sold off its 75% stake in multichannel fashion brand Toast in 2018 to focus on the core brand and bolster its coffers.
It has also been trying to get its infrastructure and systems into a suitable state for a multichannel and digitally driven world and is focusing on personalisation and the customer experience.
Group sales, which were already on a staunchly downward trend, plummeted 40.4% to £71.5m in the year to end January 2021 (FY2020) as the pandemic hit. The decline reflected a 51.8% slump in retail sales and a 33.1% drop in wholesale revenue which accounted for approaching 70% of overall sales in this challenging year. Retail sales have more than halved over the past five years as underperforming stores have been shuttered and the group remains substantially loss-making, with losses escalating in FY2020.
Stephen Marks had retained a 42% stake in the business he founded in 1969, remaining in charge as chairman and chief executive. But with widespread criticism from shareholders about the way the business was being run, Marks has been under pressure to relinquish one of these roles or sell his share. Amid the shareholder disquiet, Sports Direct (now Frasers Group) stepped in and built up a significant stake in the business.
French Connection has been pursuing a sale on and off since 2019 and rejected a bid from former All Saints and USC boss Stephen Craig in partnership with two private equity firms in early 2020.
By the middle of that year, however, French Connection was in urgent talks with potential funding partners as it battled to stay afloat amid the coronavirus crisis. The retailer warned that without a fresh injection of capital its cash resources would “eventually be eroded in the coming months” should current trading levels continue. And in July, French Connection secured funding from investment and turnaround specialist Hilco Capital, agreeing a £15m working capital facility for two years.
In February 2021, French Connection confirmed that it had received two approaches from investment groups looking to complete a takeover of the business. As the share-price soared amid the renewed interest in the company, Frasers Group offloaded its 24.93% stake.
While both parties pulled out of early stage talks in March, management confirmed in April that it was continuing to engage in conversations over the potential sale of the business but that a positive outcome was far from certain.
In early October it was confirmed that the sale of French Connection had eventually been agreed as part of a £29m deal with a consortium called MIP. The struggling business said it has accepted a 30p per share offer from Apinder Singh Ghura, the company’s second largest shareholder with a 25.4% stake in the group, as well as Amarjit Singh Grewal and KJR brothers. Underlining its change of fortunes, French Connection shares had peaked at 488p in 2004. Founder Marks will step down from the business once the sale is completed.