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French Connection long way from full recovery

The high street clothing chain is still grappling to get a handle on its recovery plan
September 20, 2016

The recent surge in French Connection 's (FCCN) share price was undermined by the latest set of half-year results from the clothing chain, which sent the shares back down 7 per cent.

IC TIP: Sell at 41p

On the retail side, strong like-for-like sales growth of 6.5 per cent across the UK and Europe was promising. But the group was up against weak comparative figures, having reported a 10.7 per cent slump in underlying sales this time last year. In terms of total sales, a 15.8 per cent reduction in square footage meant a fall of 2.3 per cent in retail sales. Retail gross margins were flat at 56.3 per cent.

The wholesale division was even more disappointing, with poor trading across US department stores, poor performances from wholesale customers and a difficult high street environment in the UK, all contributing to a 17 per cent crash in total revenue. Contract timing effects contributed towards a similar fall in licensing income, which was down by a fifth.

The group is staying upbeat: chief executive Stephen Marks says the spring and summer 2016 collections have been well received so far. Analysts at Numis still expect pre-tax losses of £3.1m for the year to January 2017, giving a loss per share of 3.3p, compared with losses of £4.7m and 4.9p in FY2016.

 

FRENCH CONNECTION (FCCN)
ORD PRICE:41pMARKET VALUE:£39m
TOUCH:40-41p12-MONTH HIGH:52pLOW: 20p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:49pNET CASH:£7.7m

Half-year to 31 JulyTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201575.8-7.9-7.9nil
201669.2-7.9-8.2nil
% change-9---

Ex-div: na

Payment: na