French Connection warns of more stores closures ahead

Fashion retailer slumps to a £12.2m interim pre-tax loss as lockdown restrictions hammer sales

French Connection has warned that it could close more of its stores after losses widened at the high street fashion chain.

The struggling retailer has closed four bricks-and-mortar outlets and five concessions over the past six months, and said it expected more “non-contributing” stores to close in the second half of the year. 

It came as the company slumped to a £12.2m interim pre-tax loss as lockdown restrictions hammered sales. Revenue more than halved from £51m last year to £23.9m.

However, its online business performed solidly during the first wave of the pandemic, with sales up more than 8pc during the six months to the end of July. Ecommerce sales constituted 56pc of its total sales for the period, compared to 22pc in 2019. 

Stephen Marks, chairman and chief executive, said: “This has undoubtedly been the most difficult trading period that the group has ever faced.

“Despite the unprecedented difficulties we continue to face alongside the rest of the high street, having been able to secure the necessary financing we feel that we are well positioned to navigate an extended period of uncertain consumer demand.”

The retailer estimated that the virus-induced lockdown hit revenue by £22.2m and net profit by £9m with poor trading partly offset by reduced costs and Government support.

Its wholesale business also struggled, with sales almost halving to just £13.8m, although some cost savings were achieved through rent reductions negotiated with landlords.

Meanwhile, economic data today showed a spike in unemployment to 4.5pc. Retail vacancies have dried up following lockdown as one estimate put sector-wide job losses above 125,000 for the year.

French Connection had been struggling prior to the pandemic. At the beginning of March, the company reported annual losses of £7.3m for the year to the end of January. 

At the beginning of 2020, French Connection said it would focus on a turnaround strategy that involved cutting costs, "right-sizing" its store portfolio and boosting investment in its online offering.

The company's board did not recommend paying an interim dividend to shareholders.