French Connection names new directors as it targets return to profitability

The retailer has suffered boardroom chaos and years of losses
The retailer has suffered boardroom chaos and years of losses Credit: Bloomberg via Getty Imag

French Connection has taken its biggest step towards addressing the intense criticism of its poor corporate governance by hiring two retail veterans to its board as it prepares to open its first new UK shop since the financial crisis.

The beleaguered fashion chain, which has suffered five consecutive years of losses, is attempting to steer itself back to profitability by shutting unprofitable stores, reducing its head office space and making its fashion more affordable.

The company reduced losses by £2m in the first half of the year, reporting a pre-tax loss of £5.7m in the six months to the end of July, compared to a loss of £7.9m in the first half of last year. Analysts at Cantor Fitzgerald said that the performance was “slightly ahead of expectations.”

Stephen Marks, executive chairman, founder and majority shareholder, said that he had was focused on returning the group to profitability "as soon as possible."

Total sales fell by 1.6pc to £68.1m in the first half, or 4.2pc at a constant currency level, partly the result of closing seven underperforming shops over the past year in an effort to stem its losses.

The company is also battling against a tough market in the US where department stores are suffering from an exodus of shoppers. Despite that, wholesale revenues were up by 7.2pc, or 2.6pc at a constant currency level to £29.6m.

While the company is shutting unprofitable stores and has renegotiated the rent on its flagship Oxford Street shop, it is opening a shop in Manchester in November, its first new UK store since 2008.

The company said the move reflected “our strategy to open new stores in appropriate locations where we believe the brand will trade profitably.”

French Connection's flagship shop on Oxford Street
French Connection's flagship shop on Oxford Street

Alongside its half-year results, French Connection named Sarah Curren, founder of online fashion site My-Wardrobe.com, and former Moss Bros finance boss Robin Piggott as its new non-executives, replacing longstanding directors Claire Kent and Dean Murray.

Ms Kent and Mr Murray had said they would step down from the board at the start of the year after come under heavy fire from activist investors  who accused them of of being “complicit in overseeing a tremendous decline in value of the company” during their combined 17 years with the business.

After failing to pressure Mr Marks into agreeing to step down or explore a sale of the company the activist hedgefunds, Gatemore and OTK,  sold their entire stakes to Sports Direct tycoon Mike Ashley in July, giving him a holding of 27pc in the retailer.

It is thought that Mr Ashley is interested in strengthening the relationship between French Connection and his fashion retail chain Flannels.

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