French Connection returns to profit, talks with potential buyers ongoing

French Connection said on Tuesday that it swung to a small full-year profit but total revenue barely grew as trading in the UK was tough.

In the year to the end of January 2019, the fashion retailer made an underlying profit of £0.1m versus a loss of £2.1m the year before. However, total group revenue was up just 0.2% to £135.3m, with total retail revenue down 10.6% to £58.4m, reflecting the ongoing store closure programme, and wholesale revenue up 10.3% to £76.9m.

In the wholesale segment, the strong growth seen last year in both UK/Europe and North America continued throughout the year and actually accelerated in the second half. The major customers in the UK continued to grow - particularly in the online space - both pure play and multi-channel.

In North America, good progress was made with all the department stores, particularly Bloomingdales and Nordstrom.

Meanwhile, retail like-for-like revenue fell 6.8% compared to 0.8% growth the year before, as the UK trading environment was difficult.

The company, which confirmed last year that it had started preliminary talks with several interested buyers about a sale, said discussions with a number of potential parties are ongoing.

"We continue to expect this strategic review (including the formal sale process) to conclude during the first half of 2019 and will make further announcements when appropriate," it said.

Chairman and chief executive Stephen Marks said: "I am pleased to report that we have achieved our target of returning the group to underlying profitability this financial year.

"This is only part of our overall journey, however it represents a significant achievement given the results over recent years.

"This has been achieved despite the ongoing difficult retail trading environment in the UK and is the result of the changes we have made in all areas of the business to adapt to the ever evolving markets in which we operate.

"While we still have a way to go to return the business to an appropriate level of profitability, I believe that we have made and continue to make significant progress."

At 1000 GMT, the shares were up 1.9% to 43.20p.