French Connection could run out of cash in months
Retailer French Connection has warned it could run out of cash within months if it is not able to raise funds from its banks.
The company said it had struggled to access government loan schemes designed to prop up ailing businesses, blaming “tight” constraints on which firms qualify.
Along with all other non-essential shops in the UK, French Connection’s stores have been forced to close to slow the spread of coronavirus.
The brand said it is still selling to some of its wholesale customers, and that online sales have spiked by 44% over the last six weeks. But the business has still taken a massive hit from the shutdown.
The board said it is in “active discussions” with a number of potential funders, and is confident of finding enough cash to support the business until French Connection can stand on its own feet again.
But if banks and other funding partners refuse to help out, it could leave the business in a precarious position.
“Without securing additional funding and should the current Covid-impacted trading levels continue, the company’s cash resources will eventually be eroded in the coming months,” French Connection told shareholders on Tuesday.
Its shares fell 7% on the news.
Management said they had “attempted to participate in as many of the Government’s support initiatives as is possible”.
Staff are on government-supported furlough, and French Connection’s stores have picked up rates relief.
“It has however proved very challenging for us, in line with other retailers, to access any other government funds due to the tight qualification constraints that have been imposed and to date we have been unable to access any further funding from these schemes,” it said in a statement.
It added: “We look forward to returning to more normal levels of trade as the situation evolves, although we do not expect this for some time to come.”