French Connection loss grows as spring collection fails to excite

UK fashion retailer French Connection Group Plc, in the midst of a multi-year turnaround programme, reported a bigger loss for the first half on Monday after its spring collection failed to win favour with shoppers, sending its shares reeling.

The 43-year-old company said it shut six underperforming stores in the period, and planned to close more in its effort to cut costs. French Connection had 394 retail outlets, including franchised and licensed stores, as of July 31.

Analysts said the upmarket retailer needed to do a lot more than it announced in its 2012 restructuring program if it was to get back on track.

"There is nothing in the statement to say there is any urgency to change strategy," Cantor Fitzgerald analyst Freddie George, who expects the company to remain unprofitable for the next two years, wrote in a research note.

French Connection has not reported an annual pre-tax profit since the year ending Jan. 31, 2012.

George cut his target price to 30 pence from 45. French Connection shares were down 8 percent at 26.50 pence at 1133 GMT. Up to Friday's close, the stock had fallen 57 percent.

French Connection said trading had improved in the first six weeks of the second half, which started on Aug. 1, with like-for-like sales in its full-price UK retail business up about 6 percent.

The company reported a first-half pretax loss of 7.9 million pounds ($12.3 million), up from 3.9 million pounds in the same period last year. Revenue fell 9.8 percent to 75.8 million pounds.

Besides the French Connection brand, which generates nearly 90 percent of revenue, the company owns the wholesale-only Great Plains ladies wear range. Its other brands are Toast, available online and in some stores, and YMC, sold wholesale and in London.