May 15, 2014
French Connection warns of weak North America sales
May 15, 2014
Fashion retailer French Connection Group reported a slowdown in like-for-like retail sales in UK and Europe in the four weeks to May 10 and warned of weak sales in North America for the rest of the year.
Shares in the company fell as much as 15 percent, making them one of the top percentage losers on the London Stock Exchange. The stock has more than doubled this year.
The company, which has posted losses for the last two years, said on Thursday it expects the North America region to trade below its own expectations for the rest of the year.
U.S. apparel retailers such as Abercrombie & Fitch and Aeropostale have lost shoppers to cheaper and trendier "fast fashion" chains such as Forever 21, H&M and Inditex's Zara.
London-based French Connection receives about a quarter of its revenue from the United States.
The retailer, known for its FCUK brand of clothing and accessories, said retail sales in UK and Europe rose 5.6 percent on a like-for-like basis in the 15 weeks to May 10.
The company, which had reported an 11 percent rise in like-for-like sales for the 11 weeks ending April 12, said its UK/Europe retail did not go on mid-season sale in April and early May.
The slowdown was due to the planned reduction in sale activity, Numis Securities analysts said in a note.
The retailer said last year it would cut inventory levels, redesign product ranges, make its buying teams more flexible and review pricing to restore the fortunes of its retail division.
French Connection had reduced its loss to 6.1 million pounds ($10 million) in the year ended January 31 from 10.5 million pounds a year earlier.
Besides the French Connection brand, which brings in nearly 90 percent of its revenue, the company operates wholesale-only ladies-wear range Great Plains, e-commerce fashion and homewares brand Toast and men's and women's wear brand YMC.
French Connection said order book for the autumn/winter 2014 collection was higher than the year-earlier period.
The company, which has about 131 outlets in UK and Europe, closed two non-contributing stores during the period.
Shares in French Connection hit a low of 74.50 pence before easing back to 77.34 pence at 1113 GMT.
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