LONDON -- Times are tough at French Connection (LSE: FCCN.L). After a brief resurgence in its share price last year, the clothing retailer has found 2012 to be much more of a struggle.
Its sales for the last six months slipped 7% to 96 million pounds. This turned a 700,000 pound profit this time last year into a 6.3 million pound loss. It's the retail side of the business that is struggling the most, while wholesale and, particularly, brand licensing are performing much better.
Of course, French Connection is well-aware of its problems on the retail side. It's been accused of selling the wrong clothes at the wrong prices in somewhat shabby stores. Today the company commented:
In March we announced our intention to undertake an extensive review of the U.K. retail business. This review has been successfully completed and has resulted in a broad range of significant initiatives details of which we are announcing today. We expect that our initiatives will have a growing positive impact on our trading performance over the next two financial years.
So even if the turnaround is successful, we're not looking at quick fixes here. Although French Connection does have a reasonable cash position, with 21 million pounds in the bank at the end of June, it's obviously not feeling too flush, as it has passed on its interim dividend. Last year it paid out a total of 1.5 million pounds in dividends.
There was no word on current trading, but French Connection said it wasn't expecting any improvement in the second half of the year. The shares plunged below 20 pence in early trading, but having recovered since, they're currently 7% off for the day at 23 pence, valuing the company at a smidgen over 20 million pounds.
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