Shares in French Connection rallied on Tuesday as the fashion retailer reported a narrowing of its full-year losses and said it was close to returning to profitability.
In the year to the end of January 2018, the company made a pre-tax loss of £2.3m compared to a £5.3m loss the year before, as revenue edged up 0.5% to £154m. Total retail revenue was down 5.5% to £83.1m but total wholesale revenue was 8.6% higher at £70.9m, while retail like-for-like sales grew 0.8%, down from a 4.4% increase the year before.
During the year, the company closed a further 11 non-contributing stores and opened a new concept store in Manchester.
Chairman and chief executive Stephen Marks said: “We have made considerable progress across the Group over the last year and I enter the new financial year with renewed confidence off the back of that success. Our goal has been to return the group to profitability and I believe we are very close to achieving that aim, given the momentum that we are currently seeing within the business.
“While it is clear that the retail market in which we are operating in the UK is unlikely to improve in the near future, we have clear visibility on the benefits we will obtain from the ongoing portfolio rationalisation. In addition the reaction to our collections and strength of our wholesale orders both for the spring and winter seasons further underpins the performance going forward. Although we are only early into the year, I believe we are in a very strong position to make significant progress again.”
French Connection also revealed that it had received an unsolicited approach about a potential offer for the group from a third party in the US. It entered a period of due diligence and negotiations over several months but ultimately this did not lead to an offer.
At 0940 GMT, the shares were up 10% to 37p.