• Q3 group turnover up 8%
  • UK/Europe retail sales rise 0.6%
  • Men's wear remains “challenging”

Currency gains and growth in its women's wear business have helped lift third-quarter turnover at French Connection Group Plc, but the UK-based fashion firm says business continues to be challenging.

During the three months to 24 November, overall group turnover was 8% higher than the same period last year.

However, most of this was due to changes in exchange rates since last year, the company said.

Sales in its UK/Europe retail division - which account for 51% of group turnover - grew by 0.6% in total and 0.3% on a like-for-like basis, thanks to strong performances from women's wear, its Toast brand and e-commerce.

But men's wear "continues to be challenging" and markets in North America and Japan remain soft.

The strength of the US dollar has also hit gross margins by leading to higher product costs.

Wholesale revenues in UK/Europe - which account for 16% of group turnover - were down 11% in the quarter, and forward orders for spring/summer 2010 are lower than last year.

The bad news continues in its North American retail business, where sales in dollar terms fell by 7.0% in total and 4.7% on a like-for-like basis in a market described as "highly promotional."

French Connection has already closed its northern European retail operations and reduced staffing levels at its head office this year in an attempt to cut costs across its business.

And last month it announced plans to close all of its 21 stores in Japan by the end of February.