Expert Opinion: French Connection to launch well-needed review
15 March 2012 | Published by Verdict
15th March 2011
French Connection to launch well-needed review
Andrew Stevens, retail analyst, gives his expert opinion:
Amid the release of a poor set of results, French Connection has announced a review of itsUKretail division in an attempt to improve on what has been a series of poor performances for the retailer in terms of sales and margin in its core market.
While the retailer blames its poor margin performance on high input costs, as well as the weakened economy forcing consumers into restricting their spending to more discounted stock, it has recognized that its comparative performance has been disappointing. The retailer is planning revenue growth and renewed profitability by enhancing its ranges – adding a premium womenswear line this spring – and broadening its product offer – launching into homewares this year. In order to address its profitability issues, French Connection has said that it plans to manage its production costs far closer, as well as reducing both sale periods and the levels of markdowns made.
These initiatives will help the retailer in the long run, however it is likely to be a slow process returning the coreUKbusiness to profitability. Efforts from the retailer to protect its brand by restricting the level of markdowns are sensible; however the retailer must ensure it stays close to its core customers, enticing them to spend through fresh and exciting product lines. The next twelve months are likely to be difficult for the retailer, however its debt free position will be of benefit once the economic recovery begins.
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Datamonitor is a leading provider of online database and analysis services for key industry sectors. We help our clients, 5000 of the world's leading companies, to address complex strategic issues. Through our proprietary databases and wealth of expertise, we provide clients with unbiased expert analysis and in-depth forecasts for seven industry sectors: Automotive, Consumer Packaged Goods, Energy, Financial Services, Pharmaceuticals and Healthcare, Technology, Transport and Logistics.