French Connection returns to modest profit but sales decline
French Connection returned to a modest annual profit in 2018, but sales continued to fall due to “difficult” trading conditions.
The retailer made an underlying operating profit of just £100,000 compared with a £2.1 million loss a year earlier.
But like-for-like sales fell 6.8% with weaker sales both on online and in store, while group revenue rose 0.2% to £135.3 million.
Retail sales declined by 11% to £58.4 million but wholesale revenue increased by 10% to £76.9 million.
As the retailer battles higher rent costs and changing shopping habits, French Connection has closed a number of stores and is looking to close further loss-making outlets this year.
French Connection said talks are also “ongoing” with a number of interested parties over the potential sale of the business.
Founder and chief executive Stephen Marks owns 42% of the retailer, while Sports Direct boss Mike Ashley holds a 27% stake.
Mr Marks founded French Connection in 1972 and it later gained notoriety for its “Fcuk” branding.
He said: “I am pleased to report that we have achieved our target of returning the group to underlying profitability this financial year. This is only part of our overall journey; however, it represents a significant achievement given the results over recent years.
“This has been achieved despite the ongoing difficult retail trading environment in the UK and is the result of the changes we have made in all areas of the business to adapt to the ever-evolving markets in which we operate.”
Mr Marks added: “While we still have a way to go to return the business to an appropriate level of profitability, I believe that we have made and continue to make significant progress.”