LONDON — Fueled by strength in the U.K. and Europe and improved performance in North America, French Connection’s first-half profits rocketed 40.9 percent.
Net income advanced to $14.8 million from $10.5 million in the first half of last year. Dollar figures have been converted from pounds at current exchange, as French Connection reported profits of 9.3 million pounds versus 6.6 million pounds in last year’s half.
Sales during the six months ended July 31 rose 12 percent to $194 million, or 122 million pounds, from $173 million, or 108.9 million pounds.
“The second half looks promising and I’m very happy with the picture, all in all,” Stephen Marks, chairman of French Connection, said in a telephone interview.
He noted that he wasn’t interested in selling the company to private investors, as so many U.K. retailers — including Selfridges, Debenhams and New Look — have recently chosen to do. “We’re very comfortable in the position that we’re in right now,” Marks said.
For the first six months, operating profit rose 24.8 percent to $20.8 million, or 13.1 million pounds, from $16.7 million, or 10.5 million pounds. Gross profit rose 12.9 percent to $103 million, or 64.7 million pounds, from $91 million, or 57.3 million pounds.
All of the sales growth came from retail and wholesale businesses in the U.K. and European markets, where sales rose 16.8 percent to $155.7 million, or 97.9 million pounds, from $133 million, or 83.8 million pounds.
In North America, sales fell 2.6 percent to $35 million, or 21.9 million pounds, from $35.8 million, or 22.5 million pounds, which the company said was due entirely to the weakening of the U.S. dollar versus the pound. In the rest of the world, sales decreased 15.4 percent to $3.5 million, or 2.2 million pounds, from $4.1 million, or 2.6 million pounds.
The total retail selling space in the U.K. and Europe increased by 21.1 percent to 207,000 square feet from 171,000 square feet during the period.
In addition to the volume increases, the company said it saw a spike in the level of full-price, in-season business, as well as continued emphasis on cost containment. These helped boost operating margin in the U.K. and European business to 15 percent of sales from 14 percent.In North America, retail sales, reported in dollars only, rose 7.9 percent to $24.7 million from $22.9 million. The firm opened a store in Pentagon City, Washington, D.C., and shut two underperforming stores. U.S. wholesale business has continued to be difficult, the company said.
Licensing income increased 55.6 percent to $2.2 million, or 1.4 million pounds, from $1.4 million, or 900,000 pounds, thanks in part to the success of the French Connection fragrance, which the company said was generating sales ahead of expectations.
Marks said the second half looked promising. In the U.K. and Europe, retail sales were up 3 percent in the first six weeks, with 13,000 additional square feet of selling space planned for the period.
In North America, retail sales have rose by 9 percent in the first six weeks of the second half, with a store set to open in Houston. Marks is upbeat about U.S. wholesale business there, too. “We expect in-season orders to generate growth for the second half of the year,” he said. Marshall Field, which opened its refurbished Chicago flagship last month, has dedicated 3,000 square feet of the ground floor to French Connection.
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