LONDON — A tough U.K. retail environment and a flawed fashion offering dragged down profits at French Connection in the fiscal year ended Jan. 31.
The firm said net profits fell 15.5 percent to $42.8 million, or 22.3 million pounds, from $50.6 million, or 26.4 million pounds, due to a drop in retail sales in the U.K. and the U.S. and a subsequent increase in markdowns.
In November, French Connection issued a profit warning.
Sales fell 0.82 percent to $510 million, or 265.7 million pounds, from $514.4 million, or 267.9 million pounds. The company admitted it had relied too heavily on previously successful styles and did not focus enough on fashion-led products.
“We got a few things wrong, and we were a bit boring,” said Stephen Marks, French Connection’s chairman and chief executive officer, in a telephone interview. “We relied on our past successes and didn’t offer enough newness. But overall, the message is positive. We’re moving ahead, and looking forward to a good year.”
Marks said French Connection offered up too many of its basic knits, which competitors have subsequently knocked off at a lower price. He added the company also “overdid” the fcuk logo T-shirt, and has since updated its T-shirts, minus the notorious logo.
In the U.K. and Europe, retail sales fell 5.2 percent to $212.4 million, or 110.6 million pounds, from $224 million, or 116.7 million pounds. In the U.S., retail sales were flat at $63.7 million, or 33.2 million pounds, and the company admitted there were larger-than-planned markdowns in the period.
In the U.K., wholesale sales rose 1.2 percent to $194.5 million, or 101.3 million pounds, from $192.2 million, or 100.1 million pounds. In North America, wholesale sales rose 0.78 percent to $24.7 million, or 12.8 million pounds, from $24.4 million, or 12.7 million pounds. The statement said that growth was due to business with the major department stores.
“Overall, America is in good shape; it’s the competition here that’s much more fierce,” Marks said.
On the upside, license income rose 25 percent to $8.64 million, or 4.5 million pounds, from $6.9 million, or 3.6 million pounds, thanks to the expansion of the fcuk fragrance worldwide and the launch of new toiletries products with Boots, the British drugstore chain.
A Stella McCartney sketch of a custom dress made from protein-based silk in partnership with biotech lab Bolt Threads. The dress will be displayed at The Museum of Modern Art's upcoming design exhibition, "Items: Is Fashion Modern?"