French Connection Group PLC Trading Statement (9516T)
July 24 2020 - 1:00AM
UK Regulatory
TIDMFCCN
RNS Number : 9516T
French Connection Group PLC
24 July 2020
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION. ON PUBLICATION OF
THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS
INFORMATION WILL BE CONSIDERED TO BE IN THE PUBLIC DOMAIN.
24 July 2020
French Connection Group plc
("French Connection" or the "Company")
Trading Update and Funding
French Connection provides an update on its recent trading and
financial position.
Trading Update
Since the start of the lock down period, the Company has been
focused on managing both the immediate and long term impact of
COVID-19 on the business. The priority throughout this period has
been the safety and wellbeing of our colleagues, customers and all
of our business partners.
Following Government guidelines, our stores and concessions were
closed from 23 March until we were allowed to reopen them again on
15 June. As expected, given significantly reduced footfall, initial
sales since reopening have been low, although conversion of those
customers actually in the stores has been better than in the prior
year. We are seeing sales volumes grow week on week, as further
relaxation of the lockdown continues, however we anticipate this to
be a gradual process especially in larger cities. Whilst ensuring
strict compliance with physical distancing and hygiene guidelines
by our staff, we have continued to operate our own websites in both
the UK and USA, with sales up 24% over the last 15 weeks. In
addition, we have continued to supply a number of the predominantly
online wholesale customers during this period. Since the general
reopening of stores we have seen a significant upturn in
interactions with the majority of our other wholesale customers in
the UK and Europe, who have now started to trade again. Over the
lockdown period the collection of receivables from our supportive
wholesale customers has been better than expected.
Funding
The Company has taken a considerable number of actions, given
the significant reduction in sales, to reduce costs and conserve
cash throughout the ongoing pandemic disruption. These actions
continue with the cooperation of many of the Company's key
stakeholders including stock suppliers, non-stock suppliers,
landlords and employees and we remain very appreciative of their
ongoing support. The Company has worked particularly closely with
its stock suppliers, many of whom we have had significant long term
relationships with, to actively manage its Autumn/Winter 2020
inventory commitments to reflect its current expectations of
trading during the season.
The Board expects that, in line with the normal seasonal trends,
its current net cash position will reduce over the coming months
due to working capital funding requirements but in addition the
payment of amounts due to HMRC, our landlords and other suppliers
that were deferred as part of the Company's COVID-19 mitigation
actions. As previously disclosed the Company has been unable to
participate in any of the government backed financing schemes due
to their qualifying requirements. Instead the Company has put in
place a GBP15 million working capital facility with Hilco Capital
for the next 2 years, which it expects will be sufficient to cover
the Company's cash requirements, based on its current conservative
expectations of future trade.
Outlook
The Company will continue to tightly manage its cost base over
the coming months and we await better visibility on the speed of
the recovery of demand across its different business channels and
territories. Although the stores have reopened, with appropriate
increased hygiene and social distancing measures in place to keep
colleagues and customers safe, it is too early to predict how
quickly and to what extent store footfall and therefore sales will
recover. This will also impact the rate of improvement within the
wholesale channel.
Given the Company's new liquidity, together with the actions
being taken to optimise sales, tightly manage costs and preserve
cash, the Board is confident that the Company is well positioned to
navigate an extended period of uncertain consumer demand, however
due to the ongoing uncertainty it does not feel it is appropriate
to provide profit guidance at this point.
Enquiries:
French Connection Group plc
Neil Williams, Chief Operating Officer +44 (0) 20 7036 7206
WH Ireland (Sole Broker & Financial Adviser)
Adam Pollock (Corporate Broking)
Adrian Hadden / James Sinclair-Ford / Chris Savidge
(Corporate Finance) +44 (0) 20 7220 1666
Paternoster Communications
Tom Buchanan
Catriona Woolner-Winders +44 (0) 20 3012 0241
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END
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