French Connection shares up as losses narrow and takeover interest revealed

Retailer French Connection has said it is `very close´ to returning to profit but continues to shut stores

Retailer French Connection has said it is `very close´ to returning to profit but continues to shut stores

But investors cheered French Connections' results on Tuesday, sending shares in the group up by more than 17 per cent in early trading.

Shares in French Connection have soared more than 13pc after the struggling fashion chain's losses narrowed a year ago and it revealed an unsolicited takeover approach.

A year ago it came under heavy fire from investors, with activist investor Gatemore Capital Management calling for a break-up of the company and for Mr Marks to give up his double role as chairman and chief executive. The company said it entered a period of discussions and due diligence "over a number of months", but ultimately it did not lead to an offer.

Like-for-like sales continued to grow, but at a slower rate of 0.8 per cent compared to 4.4 per cent a year ago.

The clothes seller closed 11 stores in the year to January, dragging down its retail sales 5.5pc to £83m.

French Connection's pretax loss narrowed to GBP2.3 million from GBP5.3 million the year prior.

Stephen Marks, chairman and chief executive, said he believed the company was "very close" to returning to profitability after making "considerable progress. over the last year".

In the Retail business, the company is still targeting store reductions, with a final aim of around 30 stores by the end of its new financial year, which ends next January.

Marks said that the group was "very close" to achieveing its goal of profitability, as it continues to close stores in the United Kingdom and find success in wholesale.

French Connection has for some time been closing stores in an attempt to stave off broader market pressures.

"While it is clear that the retail market in which we are operating in the United Kingdom is unlikely to improve in the near future, we have clear visibility on the benefits we will obtain from the ongoing portfolio rationalisation. Although we are only early into the year, I believe we are in a very strong position to make significant progress again".

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