French Connection has revealed a plan to turnaround its fortunes after reporting a pre-tax loss of £6.3m for the six months to the end of July 31. Unimpressed analysts are not expecting a quick return to profit.

“The main issues for French Connection are all front of house. On product it is simply not hitting the right notes in a consumer market that has become more selective about fashion and is thinking more about the product being purchased. Collections are not innovative or engaging enough to stimulate consumer interest and there is a sense that the brand is rather stale and has lost its way. This is set against the backdrop of a market that has become far more competitive and crowded.

“The above issues are compounded by the fact that French Connection’s prices are too high relative to others in the market. If product was ‘must have’ this would just about be acceptable; that it isn’t means that the company has had to resort to discounting in order to shift lines.

There is much work to be done to put this right and, fortunately, management does seem to recognise some of the challenges with the results of its recent review focusing on areas like shop design and product. If the changes are successfully driven through the business it will be a matter of years, not months, before financial rewards can be reaped.” - Neil Saunders, Conlumino

“Today’s poor interim results are accompanied by the long-awaited strategic review of the loss-making UK Retail business, but there is no “big bang” announcement. The new initiatives focus on improving store operations, developing the product offering and improving merchandise management, but until French Connection can get out the leases of some of its loss making stores, it is hard to see how things will change a lot.” – Nick Bubb, independent analyst

“The company confirms that it has completed its review into the UK business and has announced a number of new initiatives, which surprisingly appears to be rather underwhelming. They include a focus on improving service and merchandising skills but do not include a major restructuring of the property portfolio. We are provisionally retaining out FY13E pre-tax loss forecast of £3m to reflect weak trading outlook in the UK and the loss of the Sears licence contract.” – Freddie George, Seymour Pierce

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