French Connection says sales in its stores have been improving slowly since it was allowed to reopen them on June 15 following lockdown. It says that visitor numbers have been down, but those who visit its shops have been more likely to spend than a year earlier.
“As expected, given significantly reduced footfall, initial sales since reopening have been low, although conversion of those customers actually in the stores has been better than in the prior year,” it said in a trading update today. “We are seeing sales volume grow week on week, as further relaxation of the lockdown continues, however we anticipate this to be a gradual process especially in larger cities.”
Online sales have grown over the last 15 weeks, however, with sales from UK and US websites up by 24% compared to the same time last year. French Connection, ranked Top350 in RXUK Top500 research, has continued to supply those wholesale customers that mostly trade online over the 15 weeks and says that it is seeing more sales to its other trade customers since stores reopened. “Over the lockdown period the collection of receivables from our supportive wholesale customers has been better than expected,” it said.
The retailer has put in place a £15m working capital facility with Hilco Capital for the next two years and says that should cover its cash requirements if its conservative estimates of future trade hold up. The retailer says that will help to pay for tax, rent and suppliers to payments that it had deferred but must now pay. French Connection did not qualify for any government support beyond furloughing its staff and business rates relief.
Looking ahead, the retailer is working with its suppliers to manage its autumn/winter inventory commitments and says it is too early to predict the pattern of store footfall and sales. It concluded: “Given the company’s new liquidity, together with the actions being taken to optimise sales, tightly manage costs and preserve cash, the board is confident that the company is well positioned to navigate an extended period of uncertain consumer demand, however due to the ongoing uncertainty it does not feel it is appropriate to provide profit guidance at this point.”
As of January 31, French Connection traded from 96 shops and 195 concessions, including 43 French Connection stores in the UK and Europe. Its recent strategy has been to trade from about 30 owned stores while expanding its wholesale business as it adapted to what it termed the new retail.