(Corrects headline and first paragraph to say revenue fell due
to closure of non-performing stores, not due to a fall in
demand. Also corrects attribution in paragraphs 5,9 and 20 to
COO Neil Williams from CEO Stephen Marks)
* Group revenue down 4 pct to 189.4 mln stg
* Retail revenue down 4.8 pct to 117.5 mln stg
* Full-year underlying pretax loss narrows to 4.4 mln stg
* Shares fall as much as 6 percent
By Noor Zainab Hussain
March 12 British fashion retailer French
Connection Group Plc, which is trying to turn around
its business after years of weak sales, reported another decline
in annual revenue mainly due to the closure of non-contributing
Shares in the company, best known for its FCUK brand of
clothes and accessories, fell as much as 6 percent in early
trading on the London Stock Exchange.
The company said revenue fell 4 percent in the year ended
Jan. 31 due to the closure of non-contributing stores, coupled
with lower first-half like-for-like retail sales in the regions.
French Connection last year announced plans to reduce
inventory levels, redesign product ranges and increase the
flexibility of its buying teams as well as reviewing pricing as
part of a plan to restore the fortunes of its retail division.
"The company reduced costs by shutting down 10
non-performing stores and also by keeping a close eye on staff
rostering," Chief Operating Officer Neil Williams told Reuters
Revenue fell to 189.4 million pounds ($314.93 million)for
the year ended Jan. 31 from 197.3 million pounds a year earlier.
The second straight fall in annual revenue overshadowed a
reduction in the underlying pretax loss. French Connection has
posted losses in five of its last six financial years.
The company also said it would not declare a dividend,
choosing instead to use cash reserves to support the turnaround.
"I think given the results that we have achieved here, we
are in a good way to achieving that (profitability by 2015), but
we'll have to wait and see how this year goes," Williams told
Cantor Fitzgerald analyst Freddie George said it would take
longer than that for the company to turn in a profit.
"The company ... has to substantially increase its UK sales
densities before it is profitable in its own domestic market,
which remains a 'big ask' in our view," George said in a note.
Retail revenue fell 4.8 percent to 117.5 million pounds due
to shorter summer and Christmas sale periods, the company said.
The company delayed its Christmas sale by one week, offering
between 30 percent and 60 percent reduction in prices.
The North American retail business was also hurt by a tough
economic environment, extreme weather conditions towards the end
of the year and the closure of one store.
Revenue from the company's wholesale operations fell 2.7
percent to 71.9 million pounds.
The company reported a smaller underlying pretax loss,
helped by lower expenses and stronger trading in the second half
of the year.
Underlying pretax loss narrowed to 4.4 million pounds from a
loss of 7.2 million pounds a year earlier.
Group operating expenses fell by 6.9 percent.
French Connection said it benefited as its retail division
reduced operating losses by 3.8 million pounds over the year.
The retailer - which operates retail and wholesale
businesses in the UK, Europe, United States, Canada, Hong Kong
and China - expects to close three to five more stores this
year, Williams added.
French Connection said total revenue in the second-half was
1.8 percent lower than a year earlier, an improvement from the
first-half, when it fell 6.4 percent from the comparative
Like-for-like sales in UK and Europe rose 1.4 percent,
compared with a fall of 4.5 percent a year earlier.
E-commerce sales grew in the year by 8.1 percent, accounting
for 20 percent of total group retail sales.
Along with the French Connection brand - which accounts for
almost 90 percent of revenue - the company operates
wholesale-only ladies-wear range Great Plains, e-commerce
fashion and homewares brand Toast, and men's and women's wear
Shares in the London-based company were trading down about
1.6 percent at 62.00 pence at 1115 GMT.
($1 = 0.6014 British Pounds)
(Editing by Gopakumar Warrier and Saumyadeb Chakrabarty)