French Connection is “back on track” founder and chairman Stephen Marks has declared after interim results showed a return to the black.
The improved performance followed restructuring, including the sale of Nicole Farhi and rationalisation of US operations.
Marks said like-for-likes at the core UK and Europe business climbed 3% in the six months to July 31, helped by improvements in menswear and strong womenswear gains through ecommerce. Wholesale rose 9%, reflecting improvements in customers’ business.
The retailer has also struck a US licensing deal with Li & Fung which will be sold through Sears’ department stores. The deal is expected to generate licence income of £1.5m annually.
French Connection posted pre-tax profit of £0.2m from businesses it is retaining and sales rose 4% to £96.2m. Gross margin rose 2.4 percentage points to 52.5%.
Marks said: “I am confident that French Connection is now back on track. The restructuring is nearly complete and we are at the beginning of a new period of growth as evidenced by our new licence agreement with Li & Fung in North America.”
He warned that the second-half outlook remains uncertain. Store like-for-likes have fallen in recent weeks but wholesale orders are ahead of last year.
Marks said: “The improvement in the first half along with the reduced cost base following the restructuring allows us to be confident that we will show progress for the year as a whole.”