Fashion retailer French Connection blamed margin and cost base pressures for its "disappointing" first-half loss of GBP3.5m (US$6.2m), up from GBP2.5m a year ago.

The UK company posted a turnover of GBP112.4m, up 2.7% on 2007, but gross margin fell 1.9% to 51.8%, thanks to the strength of the euro, rising input cost prices and the level of discounting.

French Connection's ladies' wear was the company's star performer, with like-for-like sales up 8% in the UK and North America.

The company said it was hopeful that improvements to its men's wear lines would start to have an impact on second-half trading.

"Against the background of a significant downturn in our major markets, the performance of our retail business has continued to be encouraging, with resilient overall sales and continued growth in our ladies' wear division," said chairman Stephen Marks.

"In total, however, turnover has remained broadly flat, which when combined with increasing pressures on our margins and cost base, means our financial results for the first six months remain disappointing."

Marks said the economic environment was unlikely to improve in the short term, although he was "encouraged" by recent growth in the UK and Europe, despite softer trading in North America.

"Looking forward, our main aim is to build on the strong momentum within our French Connection ladies' wear business and to mirror this success within our men's wear business," he added.

Retail revenues in the UK and Europe climbed 4.5% to GBP55.5m, but were unchanged on a like-for-like basis.

Meanwhile, in North America, retail sales were down 4.4% to GBP15.3m, but like-for-likes were again flat.

The company added that difficulties experienced by wholesalers had had some impact on in-season and forward orders placed during the first half.