LONDON — After nearly 50 years of ups, downs, branding controversies and shareholder dramas, retailer Stephen Marks is looking to sell his 42 percent stake in French Connection.
The company, which is quoted on the London Stock Exchange, has responded to press speculation about a sale and confirmed over the weekend that it is looking for a buyer. Sky News was the first to report that Marks was looking to sell.
“The board confirms it is currently reviewing all strategic options in order to deliver maximum value for its shareholders, which includes the potential sale of the company. The company is now considered to be in an ‘offer period,'” French Connection said this weekend.
The board has appointed Numis Securities Ltd. as financial adviser. On Friday, shares closed up 1.2 percent to 0.43 pounds.
The announcement caps years of declining sales and profits, not to mention shareholders’ frustration with Marks, who founded the original clothing company in 1969, and who holds the title of chairman and chief executive officer.
It also comes on the heels of a 2.4 percent revenue drop in the first half to 58.1 million pounds, although the company said it expects to return to profitability at the end of fiscal 2018. In the first half, the underlying operating loss fell to 5.5 million pounds.
Like so many British high-street retailers, French Connection fell victim to increased competition from the likes of international competitors such as Zara parent Inditex and Hennes & Mauritz; rising rents and difficult leases; an ingrained culture of discounting in the U.K. and the rise of Internet shopping.
French Connection also had the added challenge of its old logo, FCUK, which turned out to be a blessing — and a curse. In the Nineties, the company was riding high, with the logo emblazoned on shirts, hoodies and caps and the media covering the company — and its controversial moniker — regularly.
By the early Aughts, however, customers, wholesale clients and media outlets had turned their backs on the logo, and in 2005 French Connection stopped using it. It was the same year that sales and profits began to suffer, and the company has been trying to play catch-up since then.
More recently, Marks had come under fire from activist investors wanting him to clean up the company’s operations and renounce his role as chairman. He’s taken some of those steps, downsizing the retail portfolio, and selling his 75 percent stake in the mail-order business Toast for 11.7 million pounds earlier this year.
Last month during the interim results announcement, Marks said he was pleased that the changes the company had made “over the last couple of years continue to move us forward. There is no doubt that progress has not been helped by the trading conditions in which we operate in the U.K., although we can take great confidence from the performance of the wholesale business and the stability of the license income.”
He said the order books provide a “clear outlook for the second half of the year in wholesale,” although retail continues to be challenging. “We remain on target to return the business to profitability this year and we will be doing everything we can to ensure that happens.”
Ashley — who has a penchant for taking stakes in troubled retailers — now holds a 27 percent stake in French Connection, having bought out the disgruntled investors, including Gatemore Capital Management and OTK.