The chain yesterday revealed profits for the third quarter of its financial year were £1.8 million below last year after revenues in its UK and Europe retail business slumped by 9.5 per cent in the last three months. While it is hopeful revenues in December and January will be better than a year ago, the company admits it is now unlikely to meet profit hopes for the financial period to the end of January. Shares slumped by almost a fifth in the wake of the update as City analysts slashed profit forecasts for this year.
French Connection told investors: “Revenue in our UK retail stores was good during the early part of the third quarter, but then slowed considerably following the end of the sale period.
“The UK fashion shopper continues to act very cautiously and, in addition, the unseasonably warm weather has had a negative impact on sales of our winter ranges.”
The profit warning comes just two months after chief executive and chairman Stephen Marks said the group was “firmly back on a growth path” and in a good position to expand further overseas.
Despite the disappointing sales performance in the UK, the retailer has resisted the temptation to cut the prices of its autumn and winter ranges.
Following yesterday’s update, Seymour Pierce provisionally cut its 2011-12 pre-tax profit forecast from £10m to £7m.
l Ted Baker, the international fashion house founded as a men’s shirt outlet in Glasgow in 1987, yesterday reported “strong” trading in the 13 weeks to 12 November, helped by its global expansion.