French Connection issues profit warning

Fashion retailer, French Connection, has cast a shadow over the high street by being the first clothes retailer to issue a profits warning in the wake of the summer slowdown, triggering concerns of a gloomy Christmas on the High Street.

Other retailers seem to be faring better with the tougher conditions and lack of consumer confidence. The London Retail Consortium (LRC) said shops in London took 11% more money in October compared with October 2006. Kevin Hawkins of LRC warned it is just a matter of time before High Streets in London also felt the pain.

French Connection said profits will fall this year after a poor performance in August and October as shoppers stayed away from its stores. Sales in its UK and Europe retail division had fallen 3% on a like-for-like basis in the last 14 weeks.

Furthermore, revenue from its wholesale business was down on 2007 due to lower levels of forward orders and the transfer of some business to its retail division.

French Connection said it expects to report a profit for the year but its ability to achieve the same level as last year depends on an improvement in general retail environment in the UK over the next few months.

The poor summer weather deterred people from the high street while mild October temperatures dampened the demand for winter clothes.

Story link: French Connection issues profit warning