French Connection facing calls to carry out 'transparent' sale process
Retailer French Connection is facing renewed shareholder calls to put itself up for sale amid accusations bosses are showing "blatant disregard" for corporate governance rules.
Gatemore Capital Management, a US hedge fund and activist investor, is stepping up the pressure on French Connection founder and boss Stephen Marks to launch a "transparent" sale process after years of heavy share losses.
The investor, which has built up an 8% stake in French Connection, said the call follows French Connection's recent move to wave through a controversial board reappointment on a "show of hands" at its annual general meeting.
French Connection failed to count proxy votes, which showed a 24% vote against the pay plans for top bosses and a 23% vote against the re-election of Mr Marks and director Sean Murray.
These figures suggest around 53% of independent shareholders who voted via proxy were against the reappointment of both Marks and the non-executive director Dean Murray, according to Gatemore.
It comes after investor advisory groups recently criticised French Connection for allowing Mr Marks to be both chairman and chief executive, while also having few independent directors on the board.
The pressure on Mr Marks, who founded French Connection in 1969, follows a near-60% plunge in the fashion chain's share price since 2013.
Liad Meidar, chief investment officer and managing partner at Gatemore, told the Press Association: "This is the poster child for poor corporate governance.
"It's a company with a solid brand and could be performing much better, but is governed poorly."
He added Mr Marks has "demonstrated a blatant disregard for the UK Corporate Governance Code and French Connection's inherent value".
"He is running the company as a closed process and at his leisure, but the time has come for him to sell the company to the highest bidder," he said.
French Connection revealed in March that annual pre-tax losses widened from £3.5 million to £5.3 million, while revenue slumped 6.7% to £ 153.2 million.
It also announced plans to close another six stores after already shutting nine under-performing outlets last year and a further two since February.
A French Connection spokesman said: "We are well aware of the views of a small group of shareholders.
"Our position has not changed. We are in the process of delivering a turnaround plan which is designed to streamline the business and return it to profitability.
"Management's focus is on achieving this and delivering value to all shareholders."