Sales at struggling fashion chain French Connection fell last year, as a result of the “difficult” trading conditions in the UK. Like-for-like sales, fell by 6.8% compared with the previous year, with declines both in store and online.
However, for the first time in seven years, the chain made a small profit of £100,000, against a loss of £2.1m. The company said discussions were still “ongoing” with several potential buyers of the business.
It said it expected its strategic review of the business, including the formal sale process, to be completed in the first half of 2019.)
Sports Direct, which is controlled by Mike Ashley, has a 26% stake in French Connection. Founder Stephen Marks, who is also chairman and chief executive, still owns almost 40%.
“While we still have a way to go to return the business to an appropriate level of profitability, I believe that we have made and continue to make significant progress,” Mr Marks said.
He said the company’s performance had improved despite the “ongoing difficult retailing trading environment in the UK”.
Mr Marks added it was “clear” that the UK retail market was “unlikely to improve in the near future especially given the uncertainty surrounding our exit from the European Union and the knock-on effect that is having on consumer confidence”.
But the better performance lifted French Connection shares by 1.9% in early trading.
During the year, the chain closed five stores and five concessions within department stores. It has closed more than half its portfolio over the last five years.
In a statement, the group said it had expected to close more stores in the second half of last year. How many stores are closed depends on negotiations with landlords over rents.
“It is becoming apparent that at the end of leases certain landlords are now becoming more flexible on terms,” the company said in a statement.
French Connection announced last October that it was exploring all strategic options for the business, including a potential sale.
Online sales were down “slightly” on the previous year, “reflecting the general trading environment”, said French Connection.
However, it added it was also affected by a high staff turnover in the area, especially at a senior level, so it had recruited a new senior team to place “greater emphasis and focus on this key area of growth”.
In April last year, French Connection sold its 75% holding in fashion brand Toast for £11.7m.