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French Connection Group plc
("French Connection" or the "Company")
Trading Update and Financial Position
As announced in our last update on 24 March, our stores and concessions continue to be closed, however we have been able to continue to operate our own websites in both the UK and USA with sales up 44% over the last 6 weeks, while continuing to supply a few of the predominantly online wholesale customers who are still trading, although this all makes up a small proportion of the overall business. In addition we are starting to see a small increase in activity in Europe as countries begin to open up.
The Company has taken a number of actions to conserve cash and reduce costs given the significant reduction in sales, together with the delayed payments from many of our wholesale customers, particularly in the USA. The Company is in ongoing and generally constructive discussions with many of our key stakeholders including:
all suppliers to confirm extending payment terms and discounts
landlords with a view to agreeing rent holidays or deferred payments
factories to manage the supply of future goods to match current requirements while reducing quantities to reflect the expected lower level of trade for the remainder of the year
rescheduling payments to HMRC
We have attempted to participate in as many of the Government's support initiatives as is possible. The Job Retention Scheme for colleagues and rates relief for the store portfolio are now in place. It has however proved very challenging for us, in line with other retailers, to access any other Government funds due to the tight qualification constraints that have been imposed and to date we have been unable to access any further funding from these schemes.
In the light of the Company's current cash position and the continued expected weak trading environment, we have been in active discussions with a number of potential funding partners. The Board is confident of raising sufficient funds to support the business until the return of trading levels that are able to support the ongoing operations. This process is proceeding well and we are making good progress on due diligence and agreeing terms. Without securing additional funding and should the current Covid impacted trading levels continue, the Company's cash resources will eventually be eroded in the coming months.
We have been developing plans for when the stores re-open to ensure they do so safely and in line with all Government guidance, so that our customers and colleagues will be able to shop and work confidently in a safe and healthy environment. Given the UK Government's recent update regarding the potential phased reopening of stores from 1 June, we are planning to open up in an orderly manner to ensure everything required is in place. We look forward to returning to more normal levels of trade as the situation evolves, although we do not expect this for some time to come. Further announcements will be made as appropriate.