French Connection Group (LON:FCCN) has posted a loss for the fifth year in a row today as revenue declined and the fashion retailer closed down stores.
The loss before tax, including store disposals and closures, widened to £5.3mln for the year ended 31 January from £3.5mln a year earlier. However, the underlying operating loss narrowed to £3.7mln from £4.7mln, as trading improved in the second half.
Revenue fell to £153.2mln from £164.2mln, reflecting the closure of nine non-contributing stores and three concessions in the retail business as well as a drop in wholesale sales. The closure of stores cost French Connection £1.6mln.
Within the retail division, revenue fell to £4.5mln from £87.9mln on the store closures, though like-for-like sales in the UK and Europe climbed 4.4% and e-commerce revenue rose 12.7%.
Wholesale revenues dropped £65.3mln from £71.8mln, driven by a poor performance in the first half.
French Connection said it has again decided against paying a dividend for the year.
The company has been under pressure from activist investor Gatemore Capital Management to explore a sale as it struggles to compete against fashion rivals including Asos and Inditex’s Zara.
The group has also been nudged to consider replacing board members and splitting the role of the chief executive and chairman.
Stephen Marks, chairman and chief executive, said French Connection saw a noticeable improvement in the second half of 2016 and into the new financial year.
“The reaction to this year's collections has been very strong so far with sales both in our stores and wholesale customers up on last year,” he said.
“It is early in the year and we have a considerable amount of work to do to take the Group back to profitability although I believe that the actions we have taken and continue to take, will go a long way to achieving that goal this year."
Cantor Fitzgerald said the underlying operating loss was slightly better than expected but remains concerned that shareholder value continues to be eroded. The broker repeated a 'hold' recommendation and placed its target price under review.
"The current restructuring programme is taking longer to restore the business toward profitability than initially hoped and we now forecast a loss of £1.5m in fiscal year 2018 and break-even in fiscal year 2019," said Cantor analyst Mark Photiades.
Shares rose 4.09% to 36.30p in morning trading.