• Underlying full-year operating loss GBP0.8m, versus GBP4.4m
  • Revenue down 5.8% to GBP178.5m
  • Retail sales fall 12% to GBP103.3m

Fashion retail business French Connection cut its full-year operating loss, but saw retail sales tumble by 12% on the back of store closures.

The UK company highlighted what it called the “continued improvement” in its financial performance, thanks to strong performances in wholesale and licensing, plus margin progression and cost control.

While retail revenues fell 12% in the year – thanks to the closure of nine loss-making stores – wholesale revenues were up 4.6%, the company said.

Gross margin dropped to 46.7% from 47.6% last year, thanks to the higher mix of wholesale revenues, but UK/Europe retail gross margins rose on the back of lower discounting.

“In spite of difficult retail trading conditions in the second half of the year, these results show that we have made another step towards returning French Connection to profitability,” said chairman and CEO Stephen Marks.

“The performance of our wholesale and licensing operations were both encouraging, supported by the continued strength of the French Connection brand worldwide.

“We have also maintained a tight control of costs and have continued to close loss-making stores.”

However, Conlumino senior consultant Anusha Couttigane said the communication of the French Connection brand “says less ‘affordable luxury’ and more ‘overpriced high street’”, adding: “It relies heavily on the wordplay associated with the FCUK acronym and, while this approach was successful 15 years ago, it can be tiresome for consumers who expect rapid innovation from fashion players today.”

But she added that expansion into overseas markets such as Spain could be a “useful strategy” for the group.