French Connection saw more of its sales take place through other businesses than through its own in the first half of its financial year, as revenues from wholesale overtook those from its retail business, its figures showed today.
The fashion retailer, ranked Top250 retailer in IRUK Top500 research, said that its sales via wholesale reached £30.8m in the first half of its financial year, to July 31, representing growth of 6.2%. At the same time, its own direct retail sales fell by 10.5% to £27.3m as it closed stores; retail sales in the UK and Europe were down by 7% on a like-for-like basis that reflects both store closures and, it said, “difficult trading conditions”.
In its latest full financial year, to January 31, retail sales (£83.1m) were still ahead of wholesale (£70.9m), but the continuing steady growth of wholesale and the continuing fall in direct retail sale mean that has changed in the first half of this year.
Today’s half-year figures show that wholesale has grown in the UK and Europe – the region where its own sales have fallen by 7% LFL – where growth has especially come from retailer customers that sell online. Wholesale has also grown to the US, where sales to department stores including Bloomingdales and Nordstrom have made “good progress”.
Licensing income, meanwhile, stayed flat at £2.6m, although French Connection-branded DFS sofas continued to sell, and overall group revenues of £58.1m in the six months to July 31 were 2.4% down on the same time last year. Pre-tax losses of £5.5m represent a 6.8% improvement on last time.
The retailer sells online and via 103 directly operated stores and 204 operated as a franchise, under licence or as a joint venture. Two directly-run UK stores closed in the first half of the year, while another six are expected to close in the second half. French Connection also sold the Toast brand to Bestseller in April, netting £11.7m.
“The increased revenue in wholesale has been driven particularly by those customers in the UK/Europe who have significant online businesses as well as with department stores in the USA,” said Stephen Marks, French Connection chairman and chief executive. “We expect this trend to grow in the second half of the year, based on our current level of Winter 18 orders.”
He said that within retail, online revenues reduced slightly. This came as store numbers fell. But, he said, the overall contribution of ecommerce was maintained. The business is making improvements to the customer experience, among which is the recent launch of a new checkout. More than half of online visits (54.4%) came from mobile during the half-year. That’s up from 49.3% a year earlier.
Marks said: “I am pleased that the changes we have made around the business over the last couple of years continue to move us forward.
“There is no doubt that progress has not been helped by the trading conditions in which we operate in the UK, although we can take great confidence from the performance of the wholesale business and the stability of the licence income.
“The order books we have provide a clear outlook for the second half of the year in wholesale although retail continues to be challenging. We remain on target to return the business to profitability this year and we will be doing everything we can to ensure that happens.”
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