SHARES in French Connection plunged yesterday after an 11 per cent rise in profits last year was overshadowed by news of falling sales.
Shares in the high street retailer lost 8.5 per cent to 340½p as it emerged that like-for-like sales dropped 9.5 per cent in the UK and Europe in the six months to 31 July.
Stephen Marks, the chairman, said, however, that the decline in like-for-like sales had come against “very strong growth” in the first half of last year, when French Connection recorded an 11.3 per cent increase in like-for-like sales.
Mr Marks insisted that the group was “very comfortable with its autumn range, with particular emphasis on denim”.
The wet summer coupled with rising interest rates have been blamed for difficult trading conditions across the clothing industry.
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French Connection yesterday reported pre-tax profits before goodwill of £15.4 million, against £13.7 million last time, as continued growth at the wholesale division and its operations in North America and Asia offset weakness in the UK.
Turnover increased 5 per cent to £128.2 million, while the dividend was up 20 per cent at 1.2p.
Paul Rossington at KBC Peel Hunt downgraded his full-year profit expectations to £42 million from £44 million but said recent sales were not necessarily indicative of the second half as a whole. He also noted that the UK and Europe retail division, which contributes about 44 per cent of total sales, was central to the company’s health.
French Connection reiterated its support for its fcuk slogan, which has attracted broad criticism: “Contrary to recent press speculation, ‘fcuk’ continues to be an important part of our branding and we will carry on using it on our products, in our stores and in our advertising.”
The slogan has been labelled “tired and tacky”, while a judge once sent a juror home for wearing it and another called it “tasteless and obnoxious” in a 1999 court case.