Ailing fashion chain French Connection has extended its deadline to find a buyer until the end of January as it revealed further losses and falling sales.
Shares in the 47-year-old group fell more than 10% to 38p on Tuesday as it delayed the conclusion of a strategic review for the second time. Less than 12 months ago the shares were worth 61p.
The retailer first announced it was looking at “strategic options”, including a sale of the business, in October last year. At that time the retailer said it expected to reach a conclusion in early 2019.
On Tuesday it said discussions about a potential sale were “still ongoing with a number of parties” but “further time is required to bring the process to a successful conclusion”.
Potential buyers are likely to include Mike Ashley’s Sports Direct, which owns 26% of French Connection. Any deal would need the backing of Stephen Marks, the group’s chairman and chief executive, who owns a 41% stake.
Talks continue as the struggling fashion chain closes stores while attempting to improve the appeal of its clothing and cut costs in a tough retail market.
On Tuesday the company reported a pretax loss of £3.7m in the six months to 31 July, with sales down more than 12% at £51m. The company said it had closed eight UK stores, including its flagship shop on London’s Oxford Street. On a like-for-like basis sales were ahead 1.4%. It also closed one of its own stores in the US and nine licensed and franchise outlets overseas.
Pippa Stephens, a retail analyst at GlobalData said French Connection’s performance was “doing little to assure prospective buyers of its future potential”. But she added: “New ownership should allow for an essential revamp of its ranges and store estate to try to regain appeal among shoppers. French Connection’s product offer lacks originality and direction, with limited newness across seasons.”
Marks, who founded French Connection in 1972, said: “I am pleased that the changes we have made to the business over the last few 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 UK, nevertheless our retail performance has been resilient, the wholesale business is strong and we continue to see good stability in our licence income.”