French Connection falls a fifth on sales warning

French Connection's shares tumbled more than 20 per cent on Friday after it warned that its retail sales for the first half of 2015 will be materially lower than expected due to "challenging conditions" continuing through the Easter trading period.

The fashion retailer, which has been struggling to reverse years of underperformance, also advised that its financial performance is set to be "below the current market expectations".

The company did not give any figures, but analysts had been expecting a full-year profit of £400,000. Instead, they are now expecting a loss of about £3.6m.

Its share price fell to 41.5p in early trading, down 22 per cent on the day. It has fallen 55 per cent in the past year from a high of 93.79p in May 2014.

French Connection said it would continue to "implement positive change" across the business, including the closure of seven of its 62 UK stores this year. It said wholesale performance had been in line with expectations, with forward orders up year on year, and that licensing continued to perform strongly.

The warning comes a month after the retailer, which has 130 operating outlets around the world and whose main business is in the UK and mainland Europe, reported worse than expected sales in its full-year results as the effects of last year's warm autumn weather continued through Christmas and into January sales.

Like other retailers, the company struggled to sell coats, hats and other winter clothing in the third quarter as shoppers delayed purchases amid mild conditions.

The problem was exacerbated by a poor performance in the final quarter as the retailer ran out of some lines during the winter sales.

Freddie George, retail analyst at Cantor Fitzgerald described the update as "disappointing" but said there were some positive signs in that French Connection still has "a number of valuable brands" including, Toast, Great Plains and YMC, which contribute 14 per cent of group revenues.

French Connection said it had £9.9m in cash, down from £12m in 2014 with no debt, and stock levels at the end of March were 7 per cent lower than the previous year.

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