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French Connection rises

Shares in French Connection jumped nearly 20 per cent on the back of a third quarter trading statement.
November 26, 2014

On the face of it, a 6 per cent fall in like-for-like sales in the three months to 31 October looks pretty bad. But shares in French Connection (FCCN) soared by nearly 20 per cent on the news. Why? Because the high-street retailer reported that gross margins in the UK/Europe retail division - which accounts for roughly 57 per cent of gross profit - improved by a massive 240 basis points and losses fell, thanks to cost cutting, closing unprofitable stores and higher full-priced sales.

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The wholesale division improved as well, with revenue up 9 per cent and management said the order book for spring 2015 was "strong". Global licensing income continued to pour in, too. Accordingly, the group's position has improved, despite the weather-hit LFL sales decline, and management still expects to hit full-year profit expectations. The news has no doubt come as a relief to the City and helped to reassure investors that management's turnaround strategy is making tangible progress.