French Connection shares up 25%

Shares in French Connection, the clothing retailer, closed up almost 25% last week valuing it at £120 million and making it one of the best performing small cap stocks in spite of the challenging retail environment.

A trader and an analyst said the increase in its share price was likely to be a takeover approach rather than an improvement in the trading environment. The trader also said shorting of the stock, or gambling on the price declining, may have contributed to its volatility.

Like-for-like sales at the fashion retailer were down 3% in the first 14 weeks of the second 6 months of its fiscal year. French Connection said it was increasingly cautious about future trading.

The trader added that the firm was rising in the absence of ’solid news’, but was extremely doubtful about the possibilities of a takeover, primarily because of the 40% controlling stake held by Stephen Marks, founder and Chief Executive.

Andrew Wade, retail analyst at Seymour Pierce, was also skeptical about a takeover bid. He said I wouldn’t be surprised if someone is running the rule over it, but they would have to get past Stephen Marks.

The company was established in 1969 and sells clothing and accessories around the world. Ten years ago, the company started branding their clothes ‘fcuk’ which caused controversy.

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