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16 Nov 2010 07:00
FRENCH CONNECTION GROUP PLC
Interim Management Statement
16 November 2010
French Connection Group PLC is announcing its Interim Management Statement covering the fifteen week period from 1 August 2010 to 13 November 2010.
During this period the business as a whole has performed in-line with our expectations. Retail revenue has been slightly lower than expected but this has been more than offset by further growth in wholesale revenue, gains in gross margins and additional overhead savings.
Wholesale forward orders for the Summer 2011 ranges are well ahead of last year and this will boost revenue towards the end of the financial year. While the Christmas trading period remains key to the outcome of the retail businesses for the full year, based on our performance to date and our strong wholesale forward orders we expect that the full year profit before tax for the continuing businesses will be at the high end of current market expectations.
Revenue in the UK/Europe retail division (accounting for 55% of Group revenue) fell by 7.7% overall and 6.1% on a like-for-like basis. Similar to the trading pattern seen in the first half of the year we have achieved strong growth in men's wear, e-commerce and Toast but the ladies' wear business was softer than last year. Gross margins have been maintained broadly in-line with last year and further overhead savings have supported the trading result.
Revenue in our wholesale business in UK/Europe (accounting for 17% of Group revenue) was well ahead of the level seen last year, with a 13% increase. As in the first half of the financial year the gross margin continues to show an improvement over the levels achieved last year and so the trading result is well ahead.
The retail stores in North America which we intend to retain for the longer term (accounting for 11% of Group revenue) have continued to perform in-line with the first half of the year and have experienced a decrease in like-for-like revenues of 4.0% but an increased gross margin. Our North America wholesale business (accounting for 9% of Group revenue) has achieved revenue broadly level with last year in Dollar terms so far in the second half.
Negotiations for the closure of the selected US stores are either completed or well advanced and we therefore expect to have completed this programme and settled the remaining cash costs of this restructuring by 31 January 2011.
The Group's balance sheet remains strong with £20.2 million of net cash at the end of October 2010 (2009: £15.7 million). The cycle of our business means that this period is the low-point for cash in the year and we will build cash reserves through the Christmas period to the end of the financial year
Other than as detailed above in this Interim statement, there have been no material events or transactions in the period from 1 August 2010 to 15 November 2010.
Enquiries:
Roy Naismith French Connection +44(0)20 7036 7063
Tom Buchanan/Catriona McDermott Brunswick +44(0)20 7404 5959
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