LONDON — French Connection reported a loss of 3.1 million pounds, or $5.6 million, in the first half, compared with a profit of 3.6 million pounds, or $6.7 million, in the corresponding period last year, due to a drop in revenues and rise in operating costs.
All figures have been calculated at average exchange rates for the respective periods.
The company said Tuesday that trading conditions were still tough worldwide, and that its ad campaigns had recently been doing more harm than good.
“The ads took over from the product, so our goal now is to get away from gimmicks and get the product back in the forefront of customers’ minds,” Stephen Marks, chairman and founder of French Connection, said in an interview.
Indeed, the company’s latest fall campaign marks a dramatic change in tack, and focuses entirely on the clothing. Until now, French Connection had relied heavily on its notorious FCUK logo and provocative concepts.
For spring 2006, the campaign showed two female models locked in a sexed-up, love-hate embrace meant to represent the “timeless clash” between fashion and style.
An accompanying 90-second spot made for TV and cinema screens showed two other female models tearing at one another’s clothes, beating each other up — and then kissing.
That campaign was conceived by Trevor Beattie, who came up with the original FCUK brand logo, which stands for French Connection United Kingdom.
French Connection ceased working with Beattie this season, and the new campaign was developed in-house with help from Yellow Door, a London public relations company. “We want to make product king again,” said Marks.
Revenue in the six months to July 31 fell 5.7 percent to 111.2 million pounds, or $200.6 million, from 117.9 million pounds, or $218.4 million. Marks said overall the high street is under pressure from increased competition and from alternative retail channels such as the Internet.
Sales at Nicole Farhi and Toast, the company’s catalogue business, both performed well, the statement said.
Operating costs increased 4.4 percent to 65.3 million pounds, or $117.8 million, from 62.4 million pounds, or $115.6 million, largely as a result of additional retail selling space opened in the second half of last year.
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In North America, retail sales declined 10 percent, but during the period a new retail management team was recruited to manage the business.
The statement said there is already improved sales performance in the North American stores as a result. Wholesale sales — mostly via department stores — grew 12 percent in the period.
With regard to the second half, Marks said the fall collection has been well received, with growth of 9 percent in the U.K. and European retail business.
In a research report on Tuesday, Seymour Pierce said French Connection had begun to turn the corner.
“But it could be a slow process due to the fact that wholesale business lags by one to two seasons. Even so, it is particularly encouraging, as at present, ‘young,’ or ‘aspirational’ fashion is not reported to be having a good time generally.”
Marks is upbeat about the future.
“Obviously we’re not thrilled to have reported a loss in the first half, but we’re positive about the end of the year,” he said.