While it has become fashionable to blame the “economic downturn” for disappointing company results, fashion brand French Connection Group claims its business is suffering due to the rising cost of utility bills and food.
Outspoken chief executive and chairman Stephen Marks accused the energy industry of profiteering on Friday, after posting pre-tax losses of £3.5m in the first half of this year against a loss of £2.5m in the same period a year earlier. However, turnover rose £3m to £112.4m.
He said that he had never seen such a combination of pressures hitting consumers at the same time – one of the worst economic climates he has seen in his 36-year retail career.
Interbrand director of brand environments David Riley says/ “The brand can only hold on to hope. The fact he is telling the investment community shows that [French Connection] is struggling.”
Marks’ recovery plan was supposed to come to fruition in 2008. After scrapping the divisive FCUK moniker in 2006 at its flagship French Connection brand, the focus returned to basics and on the clothes themselves.
Marks admits his “disappointment” that this hasn’t happened. Challenging conditions had offset the revival in French Connection’s womenswear, while menswear must do better. A new men’s design team is in place for the coming season and the fashion brand expects this to have an impact on second-half sales figures.
French Connection shocked shoppers into its stores with the once-edgy FCUK ad campaign in 1997, devised by Trevor Beattie, then at TBWA/London. But by 2005 the tag had worn thin with consumers, with critics suggesting that a once premium brand had been dragged into the gutter.
A split in July 2006 with Beattie McGuinness Bungay – the business had followed Beattie out of TBWA to the start-up agency in 2005 – sealed the fate of FCUK.
But the promised renaissance hasn’t happened, according to analysts. Philip Dorgan, of Panmure Gordon & Co, says: “We foresee losses at the pre-tax level for this year and next.”
Meanwhile, Jonathan Gabay, founder of branding agency Brand Forensics, warns that French Connection must return to its roots as a fashion brand rather than get dragged down by novelties. He says: “FCUK’s appeal is fading, mainly because it is seen as a novelty indulgence product. Against the likes of Primark, the brand does not have a strong presence.
“French Connection must market itself as a brand to be seen in, making clear who its target market is and why they must buy its clothing. Otherwise, the brand simply will not succeed,” says Gabay.
The group also includes fashion label Toast, which “has had a good season”, Nicole Farhi, Great Plains and YMC. But French Connection is by far the biggest of its brands and the one Marks has staked his reputation on turning around.
Marks says the brand “must build on the strong momentum… and mirror the success seen in parts of the label”.
And there is support from one unlikely corner. In the past, broker Numis Securities has criticised the label saying it “runs the risk of being too expensive and is not exclusive enough”.
However, Numis analyst Andrew Wave now says: “French Connection is turning a corner. There are a number of issues it has had to face, and it will take a while to work through these, but it is back on the right track.”