French Connection sees its annual losses narrow

French Connection is trying to turn around its fortunes

Struggling fashion retailer French Connection is selling its Nicole Farhi subsidiary as it reported that its annual loss had narrowed.

The company is also closing loss-making stores across the US.

The Nicole Farhi designer label is being sold to private equity group Open Gate Capital for up to £5m.

French Connection boss Stephen Marks said "tough decisions" were needed. The firm made an annual pre-tax loss of £8.7m in the 12 months to 31 January.

This compares with £11.8m for the year before.

'Difficult year'

French Connection said it was moving towards being "a more focused business which is expected to be profitable and cash generative, providing a solid base from which to develop the retained brands".

I am confident that the changes we have made will create a solid base for the development of the business and will enable the group to return to profitability in the near future

French Connection boss Stephen Marks

Chief executive Mr Marks added: "It is sad to see the Nicole Farhi brand leaving the group.

"But I am delighted that its new owners are totally committed to nurturing the brand and the considerable talents of the team so that its full potential is realised."

The Nicole Farhi business made a loss of £5.6m last year, despite revenues of £21.7m.

Across the French Connection group, like-for-like UK sales were up 2.8%.

Its ladieswear range performed even better, with sales up, again on a same-store basis, by 4.8%.

However, the firm said its menswear lines continued to underperform.

Mr Marks said 2009 had been a "difficult year".

"However, I am confident that the changes we have made will create a solid base for the development of the business and will enable the group to return to profitability in the near future," he added.

In an earlier edition of this story we said that French Connection had seen its annual losses widen.

While they have widened on a post-tax basis to £24.9m from £16.4m, on the widely-reported pre-tax basis they have narrowed.