Fashion retailer French Connection (FCCN) continues to improve its performance and this is reflected in results for the six months to 31 July 2017. However, there is more work to do to return to profitability.
The retail sector has come under pressure this year as inflation and rising costs from the weaker pound has squeezed consumers’ disposable income.
French Connection says the closure of seven loss-making stores has impacted sales, which fell 7.5% to £38.5m. In the UK and Europe, like-for-like sales are broadly flat with an improved margin rate thanks to fewer promotions.
The retailer anticipates its good performance will continue throughout the year thanks to full price sales improving and a strong order book for its winter collection.
Cantor Fitzgerald’s Mark Photiades is cautious, but acknowledges an improved performance across all divisions and better than expected pre-tax loss of £5.7m, down from his forecast £6.4m.
‘With the better than expected first half performance and the positive start to the second half of the year, we expect consensus upgrades this morning,’ says Photiades.
Weakening consumer spending, unseasonal weather and competition remain risks on the horizon.
Shares in French Connection are broadly unmoved at 43.7p.
