Clothing retailer back in fashion with full profits
Fashion retailer French Connection said it was "delighted" to return to full-year profit as it reaped the rewards of a major restructuring.
It made profits from continuing operations of £8.9m in the year to January 31, compared to a loss of £9m the previous year, despite difficult high street conditions.
The restructuring has seen the company sell its loss-making Nicole Farhi brand and close its Japanese business and some stores in North America and Europe.
The shake-up left French Connection with its UK and European retail and wholesale operations, the Great Plains wholesale-only ladieswear range and Toast, its mail-order fashion and homewares brand.
Founder, chairman and chief executive Stephen Marks claimed the business was "back on track".
He said: "I am delighted with the significantly improved performance for our latest financial year.
"We have achieved a considerably higher profit from the core continuing operations, notwithstanding a period of major change for the group and challenging market conditions.
"I am looking forward to growing the business further from the solid foundations generated by our recent reorganisation."
Same store sales in the UK and Europe declined by 1.4% in the year, but sales to other retailers in the division grew by 11% to £36.1m. Group sales from continuing operations increased 2% to £205m.
The fashion industry faces significant pressure after cotton prices doubled and as wages in the Far East continue to rise, while consumers are sensitive to price increases, added Mr Marks.
He is confident that French Connection can now gain market share and benefit from any recovery in clothing sales.
Shares rose 2% after the company trebled the dividend payout for shareholders to 1.5p and said future payouts would increase with profits.
The company made a bottom-line loss of £2.4m compared to £24.9m the previous year when non-continued operations are included.
There are stores in Belfast, Lisburn and Londonderry, two in Cork, one in Dublin, and outlets at Blanchardstown and Dundrum as well as concessions in department stores including House of Fraser.
The UK and Europe retail business made a loss of £1.6m last year and it does not expect a significant improvement this year as a result of the difficult trading environment.
French Connection estimated that it will put up prices by about 8% this year although margins at its UK business will drop as it absorbs some of the cost hikes.