The bad news keeps rolling in for investors in clothing retailer French Connection (FCCN). Six store closures and a 10.7 per cent drop in like-for-like sales across the UK and Europe precipitated the drop in revenues given in our table. The group already flagged sluggish trading back in April after it transpired that the spring 2015 collection had been a poor seller. Still, retail gross margins remained more or less intact, at 57.4 per cent, as the group controlled the level of discounting and managed to sell a higher proportion of full-price products during promotional periods.
Wholesale margins, on the other hand, fell to 31.6 per cent, compared with 32.6 per cent in the first half of 2014, as lower re-orders forced the group into additional discounting to clear stock. Licensing income looked better, up 3.4 per cent year on year to £3m.
So far the second half of the financial year has showed more promise, with like-for-like sales growth of around 6 per cent in the first six weeks. That said, management plans to shut three or four more stores before the year-end, and is counting on a strong Christmas trading period to boost the annual figures.
Bloomberg consensus gives losses per share of 2.1p this year, compared with losses of 0.8p for FY2015.
| FRENCH CONNECTION (FCCN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 26p | MARKET VALUE: | £25m | |
| TOUCH: | 25.5-26.3p | 12-MONTH HIGH: | 65p | LOW: 25.8p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 49p | NET CASH: | £15m | |
| Half-year to 31 Jul | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 84.0 | -3.9 | -4.0 | nil |
| 2015 | 75.8 | -7.9 | -7.9 | nil |
| % change | -10 | - | - | - |
