French Connection's (FCCN) recovery was thrown off the rails after the high street retailer issued a stark profit warning, sending its shares plummeting 18 per cent to 43p.
The negative like-for-like sales growth experienced in the second half of the last financial year has continued, which means retail sales will be "materially lower" than expected in the first half, prompting a big downgrade to full-year earnings. There will also be seven store closures. That means French Connection won't move into profit this year, as we had hoped. Instead, analysts have downgraded pre-tax profit estimates from £500,000 to a £3.5m loss.
The only good news was that wholesale revenue was in line with expectations, forward orders were up and licensing is performing strongly. There is £9.9m of net cash in the bank and stock levels at the end of March were 7 per cent lower than last year.
