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19 May 2010 11:47
FRENCH CONNECTION GROUP PLC
Interim Management Statement
19 May 2010
French Connection Group plc is announcing its Interim Management Statement covering the period from 1 February to 15 May 2010.
Update on restructuring
The process for the completion of the disposal of the Nicole Farhi business is progressing to plan. As previously announced the proposed disposal is subject to a number of pre-completion conditions including shareholder approval and it is expected that the General Meeting will take place in late June. The remaining conditions are expected to be met prior to the General Meeting.
Negotiations for the disposal of certain of the US stores are also making progress. The closure of the Japan business is now complete.
Current trading
The operating result in the first fourteen weeks of the financial year (within the businesses which will be retained following completion of the restructuring) has been slightly ahead of plan and better than the comparable period last year. While retail revenue has been a little softer than last year, the gross margin has strengthened and overheads remain tightly controlled.
Revenue in the continuing UK/Europe retail division was 1.9% below last year on a like-for-like basis while the gross margin benefited from less discounting. Within the sales performance, men's wear achieved encouraging growth in the period, showing the early signs of recovery in that division. Ladies' wear revenue was a little lower on a strong comparable performance. In addition, both French Connection e-Commerce and Toast are continuing to perform well.
In our North America retail business, like-for-like revenue in the stores we intend to retain was down 2.5% but, with considerably less promotional discounting, the gross margin was well ahead of last year.
Deliveries in our French Connection wholesale businesses during the period were ahead of last year. Forward orders in both UK/Europe and North America for the Autumn/Winter season are also ahead, reflecting the successful sell-through of our ranges last year.
Our balance sheet remains strong with £24.4 million of net cash at the end of April 2010 (April 2009: £20 million). There have been no other significant changes in the position of the company over the period since the publication of the report and accounts for the year ended 31 January 2010.
Outlook
Looking forward, we are pleased with the early results from our current men's wear ranges in our retail stores and we are aiming to improve on this through the rest of the year while maintaining last year's strength in ladies' wear.
The UK fashion retail market appears to have been resilient in recent months but there is no certainty this will continue through the rest of the year and we are planning accordingly.
Other than as detailed above in this Interim Management Statement or in the Annual Report published on 15 April 2010, there have been no material events or transactions in the period from 1 February 2010 to 19 May 2010.
Enquiries:
Neil Williams/Roy Naismith French Connection +44(0)20 7036 7063
Tom Buchanan/Deborah Spencer Brunswick +44(0)20 7404 5959
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