The contrast between online retailers and their brick-and-mortar counterparts has been demonstrated again by updates from both French Connection and Asos.
The fashion retailer best known for its FCUK brand has seen its shares drop 1.5p to 23.5p - a 6% decline - after it slumped to a first half loss of £6.3m compared to a £700,000 the same time last year. Like for like sales in its UK and European retail division fell 9.5%, as demand remained weak.
It has completed a review of its retail business including the sale of loss-making stores. But it admitted the strategy could take two years to have any meaningful effect on its trading performance. Chairman and chief executive Stephen Marks said:
We recognised that the route to sustained recovery is likely to take some time but we are committed to building on French Connection's core strengths.
Analyst Nick Bubb said:
Today's poor interim results from French Connection are accompanied by the long-awaited strategic review of the loss-making UK Retail business, but there is no "big bang" announcement. The new initiatives focus on improving store operations, developing the product offering and improving merchandise management, but until French Connection can get out the leases of some of its loss making stores, it is hard to see how things will change a lot.
Meanwhile Asos, which sells its fashion over the internet and targets customers wanted to emulate the designer looks of the likes of Alexa Chung, said retail sales jumped 31% to £141m in the three months to the end of August. In the full year, sales rose 38% to £538m, and despite the recession, it was confident about the outlook, helped by its international presence. Its shares have climbed 41p to £20.82.
