8.30am: Retailer rises on outlook and bid hopes
French Connection PLC (LON:FCCN) has revealed the damage done by the shutdowns caused by the pandemic, but the beleaguered fashion retailer could yet be the target of a takeover bit.
Full year revenues fell 40.4% to £71.5mln as it had to shut its stores, while there was also reduced demand from wholesale customers.
Its losses rose from £2.9mln last year to £11.7mln, thanks to the decline in sales and one-off stock provisions. Cost cutting helped mitigate some of the decline, with rents re-negotiated with landlords, use of the government’s furlough scheme and reducing staff numbers.
Online sales improved in the second half, with strong performances from homeware and casual clothing (not surprising, given people were stuck at home during lockdown).
The company is more positive about the outlook.
Chief executive Stephen Marks said: “Our key focus for the year has been to navigate our way through the difficult challenges we have faced as a result of the COVID-19 pandemic.
“Initially we worked with our key stakeholders to stabilise the business and secure new financing. Trading had been broadly in line with our expectations at the time of the financing but we were then hit by the second and third national lockdowns in the UK. Given the new financing, together with the actions being taken to optimise sales, tightly manage costs and preserve cash, we are confident that the group is well positioned to navigate any further period of uncertain consumer demand…”
With stores having predominantly re-opened in the UK, we are seeing a much better sales performance than we experienced at the end of the first national lockdown although it will take time to see how quickly things develop over the coming months, in our own stores but also for our wholesale customers. Overall though I feel that we are definitely moving in the right direction once again.”
There is also the prospect of a bid.
In February it received two early stage approaches from US funds Spotlight Brands and Go Global. Since then other interested parties have emerged so there are now a number of talks taking place. It said: “These discussions continue although at this point there can be no certainty that an offer will be made for the company.”
The market has reacted well to this update, with the company’s shares up 1.4p or 6.22% to 23.9p.
Also heading higher is Alba Mineral Resources PLC (LON:ALBA) after a positive update from its Amitsoq graphite project in southern Greenland.
It said purification test work on graphite from the site confirmed it was suitable for use in Lithium Ion batteries.
Executive chairman George Frangeskides said: “”Our test work programme at Pro Graphite in Germany, which has now concluded, has achieved our objectives. We can now move forward with our plans to define a large-tonnage deposit at Amitsoq in the knowledge that our graphite not only has exceptionally high average grades but is also battery grade material which can be sold into the electric vehicle sector, which is by far the largest growth market for graphite.”
Alba has added 23.64% or 0.07p to 0.34p.