Major disappointment for French Connection

French Connection has suffered a blow as full year profits more than halved. The fashion retail chain, which issued three profit warnings last year, referred to the results as a "major disappointment". Wholesale orders, which make about 40 percent of UK and European sales, dropped 25 percent. In the UK, retail revenue rose 2 percent to £113 million. The average selling space increased 12 percent but like-for-like sales fell 5 percent, although they managed to flatten out during the second half of the year. The US saw its retail business slow down, resulting in weaker operating profits. The wholesale business, however, showed healthy growth.

Pre-tax profits more than halved to £15.7 million, compared with £33.7 million the year before. Turnover fell 7 percent to £246.3 million and operating profit was down 64 percent at £12.5 million. "The last year has proved to be the most difficult we have experienced for a considerable period of time," said founding chairman Stephen Marks. "These results are a major disappointment for the board and we are doing all we can to reverse the decline."

The group, which also owns designer label Nicole Fahri and mail order company Toast mail, said it was "focused on improving ranges" and believed that those for summer 2006, now in stores, were a step in the right direction. The company declined to comment on how trade is doing, as the collection has only been in stores for a brief time. Reaction to the range and the advertising had been good though, it said.

Recently, the company has tried to revive the brand with a new ad campaign which features two women, representing Style and Fashion, fighting then kissing each other. The campaign, which cost £2 million, provoked more than 100 complaints. Just as with the provocative FCUK brand logo, mastermind Trevor Beattie again managed to incite the wrath of some of the public.

Chief operating officer Neil Williams denied that the brand was losing customers as a result of high pricing, saying: "We look at pricing very closely. When the product is a good fashion-forward product and well made, the pricing is right." "Strong product design has always been the key to our long-term success," said the company. "In this regard we have faced some challenges over the past few seasons. Our return to grow will be a slow process dependent on producing distinctive, fashionable, well-made garments on a consistent basis."