French Connection announced a review of its troublesome UK retail operation, after it slumped to an £8.2m loss in the year and wiped out the progress made in its wholesale and international businesses.
Some of the blame for the weak UK performance can be laid at the door of a soggy retail environment – chairman and chief executive Stephen Marks said that the business had had to contend with "the most difficult winter season I have seen in all the years I have been in business". But finance director Roy Naismith was frank in his admission that some of the problems are specific to French Connection, and that there was no "silver bullet" that would bring an immediate turnaround at the operation.
The UK's problems stood in stark contrast to the performance of its wholesale and international businesses. New accounts saw UK/Europe wholesale revenues climb 17 per cent, while North America delivered operating profits of £3.3m, against break-even a year earlier, helped along by a £2m first-time contribution from licensee Li & Fung and royalties from the launch of a new branded fragrance, Friction.
Broker Numis Securities expects underlying pre-tax profits of £4.7m and EPS of 3.7p in the year to January 2013 (from £4.2m and 3.9p last year).
FRENCH CONNECTION (FCCN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 55p | MARKET VALUE: | £52.7m | |
| TOUCH: | 54-56p | 12-MONTH HIGH: | 133p | LOW: 34p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 77p | NET CASH: | £34.2m | |
| Year to 31 Jan | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 236 | 3.1 | 1.5 | 5.0 |
| 2009 | 214 | -11.8 | -11.5 | 5.0 |
| 2010 | 213 | -9.0 | -9.6 | 0.5 |
| 2011 | 205 | 7.3 | 9.2 | 1.5 |
| 2012 | 215 | 5.0 | 4.7 | 1.6 |
| % change | +5 | -32 | -49 | +7 |
Ex-div: 21 Mar Payment: 4 Jul | ||||
