- French Connection was started in 1972 by North London-born Stephen Marks
- The business recorded a pre-tax loss of £7.3million in the year to January 31
- High street fashion retailers have struggled recently due to online competition
Fashion retailer French Connection says its cash reserves could dry up in the coming months if it fails to gain additional financial support and sales continue to remain low because of the coronavirus.
The company has had its stores closed since the government announced that all non-essential retailers should shut to prevent the Covid-19 disease spreading.
Revenues have been adversely affected despite a 44 per cent jump in its online trade in the UK and USA in the last six weeks and the maintaining of supplies to some online wholesale customers.
French Connection is using the CJRS, which allows firm to have 80 per cent of an employee’s earnings up to £2,500 per month funded by the government if the individual is put on furlough
In response, French Connection has implemented various contingency measures to try and offset the shutdown of its stores, including accessing the government’s Coronavirus Job Retention Scheme (CJRS) and 100 per cent business rates relief.
Businesses can have 80 per cent of an employee’s earnings up to £2,500 per month subsidised by the government through the CJRS if they put the individual on furlough. The scheme was recently extended to the end of October.
Harrow-born CEO and Chairman Stephen Marks founded French Connection in 1972
Despite this, French Connection said it had ‘proved very challenging for us, in line with other retailers, to access any other government funds due to the tight qualification constraints that have been imposed and to date we have been unable to access any further funding from these schemes.’
It added: ‘We look forward to returning to more normal levels of trade as the situation evolves, although we do not expect this for some time to come.’
French Connection was started in 1972 by Stephen Marks, the Harrow-born son of hairdressers, and named after the Gene Hackman movie that came out the previous year.
Marks remains the chairman and chief executive of the firm, which delivers goods to over thirty countries.
The company grew fast and was listed on the London Stock Exchange just over a decade later before its founder regained control seven years later. Sales continued to rise over the next decade when it introduced its famous FCUK logo.
However, like multiple other high street fashion chains, it has struggled with declining sales and competition from online brands in recent years.https://investing.thisismoney.co.uk/modules/price-chart/?epic=FCCN
In 2018, the tennis-loving Marks announced he wanted to sell his 42 per cent stake in the firm.
However, when it published its most recent annual results in January, bosses confessed that a buyer had not been found. The business also recorded a pre-tax loss of £7.3million and a sales decline of almost 12 per cent to £120million in the year to January 31.
‘We believe the trading landscape in the UK is unlikely to improve in the short term and this has a potential impact on both the retail and wholesale businesses,’ it remarked.
Shares in the French Connection Group were down 4.4 per cent to 5.4p during mid-afternoon.