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18 May 2011 07:00
FRENCH CONNECTION GROUP PLC
Interim Management Statement
18 May 2011
French Connection Group plc is announcing its Interim Management Statement covering the period from 1 February to 14 May 2011.
Trading update
Group revenue in the first three months of the financial year has been 3.6% ahead of the same period last year driven by wholesale volumes and despite volatility in the UK retail market.
Revenue in the UK/Europe retail division was 1.8% below last year on a like-for-like basis.1 Sales in the early part of the period were weak however there has been a significant improvement since the start of the Easter holidays and particularly in the lead up to the Royal Wedding. Within this our Toast business continues to perform well. As expected retail gross margins are below the levels seen last year due to increases in input costs and are in-line with plan.
Our rationalised North America retail business performed well, despite some softness in Canada, with like-for-like revenue up by 1.6% in the period and with margins maintained at the levels achieved in the comparable period last year.
Our global wholesale business performed strongly during the period with deliveries well ahead of last year. Forward orders for the Autumn/Winter season are also ahead of last year. This has been supported by the continued expansion of our international franchise network with stores recently opened in Russia, Jordan and Turkey.
Licensing continues to be an important part of the group's activities benefiting from the strength of the brand globally. The launch of our licensed brand "UK Style by French Connection" with Sears in the US has gone well.
Our balance sheet remains strong with £18.5 million of net cash at the end of April 2011 (April 2010: £24.4 million), the reduction largely reflecting the costs incurred during last year in restructuring the business.
Outlook
Despite the strong growth achieved in the last few weeks, we remain cautious about the UK retail market in the remainder of the year. Nonetheless, we are pleased with the current trading which, together with the strength of our Autumn/Winter ranges and the good performance of our wholesale and licensing businesses, gives us confidence that we will achieve our objectives for the year.
Other than as detailed above in this Interim Management Statement or in the Annual Report published on 15 April 2011, there have been no material events or transactions in the period from 1 February 2011 to 17 May 2011.
Enquiries:
Neil Williams/Roy Naismith French Connection +44(0)20 7036 7063
Tom Buchanan/Catriona McDermott Brunswick +44(0)20 7404 5959
Notes:
1. UK like-for-like sales comparisons are based on VAT-inclusive sales prices. VAT increased from 17.5% to 20.0% on 4 January 2011.
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