UK: French Connection warns of GBP7m H1 profit drop
By Petah Marian | 9 August 2012
UK clothing brand French Connection today (9 August) warned that first-half operating profit would be GBP7m (US$10.9m) lower than last year on the back of increased discounting.
The company said revenue fell 7% over the half-year ended 31 July, and that gross margin was also lower as a result of additional discounting.
French Connection also revealed that the supply agreement between LF USA and Sears for products under the UK Style by French Connection brand has been terminated.
The licence generated GBP1.9m over the year ended 31 January. It now expects income from the licence to generate GBP0.9m this year.
New licensing agreements include the recently-agreed French Connection children's wear range and footwear, while opportunities in outerwear, accessories and furniture are currently the subject of advanced discussions.
"Our winter 2012 wholesale orders in UK/Europe are slightly below the levels at this time last year and we are working to increase the levels of in-season ordering to compensate for this," the company said in a statement. "We are achieving continuing revenue growth in North America, offsetting the decline in UK orders to some extent."
French Connection said that while the initial reaction to its winter collection has been "encouraging", it is taking a very cautious outlook for retail revenue in the second half.
Sectors: Apparel, Finance, Retail
Companies: French Connection
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UK: French Connection warns of GBP7m H1 profit drop
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