Clothing retailer French Connection has reported a full-year loss, due to continued severe trading conditions in the UK and potential uncertainty due to the COVID-19 coronavirus.
“After making further progress during the first half of the year, the overall result for the financial year is disappointing. Performance during the second half has been considerably worse than expected, particularly during the fourth quarter in the UK, reflecting the continued difficult trading conditions and a shift in the phasing of wholesale deliveries to customers into the New Year,” said Stephen Marks, Chairman and Chief Executive in a statement.
Alongside other British retailers, such as Ted Baker and Superdry, French Connection has faced subdued consumer demand brought on by political uncertainty related to Britain’s exit from the European Union.
“The second half of the year has proved to be particularly challenging. A tough economic climate, particularly in the UK, provided headwinds that impacted on our ability to build on the improvement in the first six months. Underlying result for the full year to January 2020 was a loss of £2.9m compared to an underlying profit of £0.8m in the comparative period,” explained Lee Williams, Chief Financial Officer.
During the second half of the financial year, the company closed all of their fourteen joint venture stores in China and Hong Kong, which generated a total loss of £0.5m. Further to this, wholesale revenue grew in North America but contracted in the UK and Europe due to shipment timing, which resulted in an overall decline of 4.8%. Retail sales decreased by 20.0% and e-commerce revenue also contracted by 8.1%.
“We believe the trading landscape in the UK is unlikely to improve in the short term, and this has a potential impact on both the retail and wholesale businesses. Against this background, we are working hard to ensure we are operating as efficiently and cost-effectively as possible while working closely with all our trading partners to maximise business with them,” added Marks.