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French Connection losses narrow

French Connection has shrunk its losses in its preliminary results for the year to 31 January, as the business continues to slim down its estate.

It made an underlying operating loss of £0.6m during the year, improving by £3.1m on 2017.

The business said it closed seven stores and four concessions during the period, but opened a new concept store in Manchester.

French Connection said it is targeting to have reduced its store portfolio to 33 full-price French Connection stores by the end of the current financial year. It currently operates 36 in the UK and four in the US.

Since year end it has closed one store and at least another five are planned to close later in the year.

Revenue inched up 0.5% to £154m, compared with the previous year when it fell by 6.7% to £153.2m. Like for like sales in the UK and Europe edged up by 0.8%, while total wholesale revenue grew by 8.6%.

Total retail revenue dropped by 5.5% to £83.1m.

Chairman and chief executive Stephen Marks said: “We have made considerable progress across the group over the last year and I enter the new financial year with renewed confidence off the back of that success. Our goal has been to return the group to profitability and I believe we are very close to achieving that aim, given the momentum that we are currently seeing within the business.

”While it is clear that the retail market in which we are operating in the UK is unlikely to improve in the near future, we have clear visibility on the benefits we will obtain from the ongoing portfolio rationalisation.

“In addition the reaction to our collections and strength of our wholesale orders both for the spring and winter seasons further underpins the performance going forward. Although we are only early into the year, I believe we are in a very strong position to make significant progress again.”

Its composite gross margin was mostly flat at 45.2%, compared with 45.8% in 2017.

At the end of the period net cash stood at £9.5m, compared with £13.5m in 2017.

French Connection also revealed it received an unsolicited approach about a potential offer for the group from a third party in the US during the year.

“In the interest of all shareholders, we entered a period of full due diligence and negotiation over a number of months,” Marks said in his statement to shareholders. ”This ultimately did not lead to an offer for the group.”

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