French Connection Group’s cost-cutting drive (FCCN.L) helped reduce losses slightly in the first half of 2018, but sales dropped, interim results showed on Thursday, underscoring the intense competition facing the FCUK brand owner.
The British fashion retailer said overall revenue fell 10.5 percent to 27.3 million pounds, as like-for-like sales in the UK, Europe were 7 percent lower.
French Connection has closed stores and hired new management and design teams as it struggles to fend off competition from fast-fashion rivals such as ASOS (ASOS.L), Forever 21 and Inditex’s (ITX.MC) Zara.
The company expects to close eight more stores this year and has reviewed lease contracts of various other loss-making stores, it said, citing deterioration of trading conditions on the UK high street.
“There is no doubt that progress has not been helped by the trading conditions in which we operate in the UK,” said Chief Executive Stephen Marks, who holds a 41.6 percent stake, making him the company’s largest shareholder, according to Thomson Reuters data.
The owner of the Great Plains and YMC brands reported an underlying pretax operating loss of 5.5 million pounds for the six months ended July 31, down from 5.9 million pounds a year earlier.
It also recognised an impairment provision of 2 million pounds related to a debt from its Indian licensee and an 800,000 pound bad debt provision due to House of Fraser going into administration.
French Connection, however, reiterated that it was on track to turn profitable by the end of the year.
The retailer said in March for the first time it was close to turning profitable and would consider restarting dividend payments.
The company had agreed in April to sell its 75 percent stake in clothing brand Toast, known for its Venetian palazzo and pyjamas for women, to Dutch firm Bestseller United A/S.