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26 Nov 2008 07:00
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FRENCH CONNECTION GROUP PLC
Interim Management Statement
26Ā NovemberĀ 2008
French Connection Group PLCĀ is announcing its Interim Management Statement covering the period from 1 August 2008 to 25Ā November 2008.Ā
It has been widely reported that the retail environments in both the UK and North America have deterioratedĀ markedlyĀ since the banking crisis hit the headlines in September. WeĀ tooĀ have seen the impact of this in our sales figuresĀ withĀ theĀ strong performanceĀ in UK retail salesĀ in the first weeks of the new seasonĀ replacedĀ byĀ softer results more recently. Overall Group turnover in the three months to 30 October 2008 is slightly below the level achieved last year. Ā
In the first sixteen weeks of the second half of the financial year starting on 1 August 2008, sales in the UK/Europe retail divisionĀ (accounting for 49% of Group turnover)Ā grewĀ byĀ 3.7%Ā in total andĀ grew byĀ 1.0%Ā on a like-for-like basis. In French Connection ladies' wear and Toast we have seen strong growth. Our men's wear ranges have performed less well, continuing the trend seen in the first half. In recent weeksĀ theĀ sales performanceĀ across UK/Europe retailĀ has becomeĀ weakerĀ andĀ considerablyĀ more volatile.
As previously highlighted,Ā revenueĀ in ourĀ wholesale business in UK/EuropeĀ (accounting for 21% of Group turnover)Ā isĀ below the level seen last yearĀ reflectingĀ the transfer of business from the wholesale division to the retail division andĀ lower levelsĀ of in-seasonĀ orders.Ā Ā Forward orders for Spring/Summer 2009Ā remainĀ broadlyĀ flat onĀ last yearĀ after taking account of the transfer of business to retail.
In ourĀ North AmericaĀ wholesaleĀ businessĀ (accounting for 8% of Group turnover),Ā revenueĀ in Dollar terms in the second half isĀ now expected to beĀ slightlyĀ below that achieved last year as our customers seek to delay delivery of new season product in anticipation of extended sales periods after Christmas. Further, the difficulties which our customers' areĀ facingĀ areĀ likely toĀ impactĀ the level of orders placed for the new financial year.
Our balanceĀ sheet remains strong with Ā£20.0Ā million of net cash at the end ofĀ OctoberĀ 2008 (2007: Ā£26.4Ā million). The reduction in cash levels reflectsĀ Ā£3.0 million ofĀ capital expenditureĀ includingĀ five new stores world-wideĀ andĀ the impact ofĀ the trading resultsĀ overĀ theĀ previous twelve months. The cyclicality in our business resultsĀ inĀ October being one ofĀ theĀ low-points for cashĀ inĀ the year and we would expect to build cash reservesĀ as normalĀ through the Christmas period.
As with many retailers, the Christmas trading period is key to our results for the year and theĀ significant downward trend in sales inĀ recentĀ Ā weeks indicates that we shouldĀ be cautious in our expectations, despite the good start to the period in UK/Europe retail.
Other than as detailed above in this Interim Management Statement, there have been no material events or transactions in the period fromĀ 1 August 2008Ā toĀ 25Ā November 2008.
Enquiries:
Roy NaismithĀ French Connection +44(0)20Ā 7036Ā 7206
Tom Buchanan/Deborah Spencer Brunswick +44(0)20 7404 5959
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