fashion is our business

Fashion
Fashion is transient in nature and constantly evolving in form and concept, and so to design fashion clothing is a confusing and volatile experience.  It is often, however, this very volatility that creates the excitement and buzz which draws people into this most precarious of businesses.

The fashion game is a tough one with many casualties. However, after more than 35 years in the business with varying degrees of notoriety and success, French Connection is now one of the most recognisable fashion brands on the high street with a global reach, operating in over 30 countries, with over 1,000 stockists worldwide. 

Credible and distinct
In 1972, when French Connection was conceived, we set out to create well-designed, stylish clothing that appealed to a broad market.  French Connection has since become synonymous with fashion and style. 

In an industry inevitably obsessed with image and public perception, it is our enduring desire to create and maintain brand credibility and distinctiveness in an ever-crowded market place.  Driven by innovation and change, the brand’s strength lies in balancing new and exciting ideas with consistent delivery of quality and affordability.  Design is the bedrock of our business around which business and economic issues revolve.

Vision, attitude and lifestyle
French Connection founded its success on an original and distinctive blend of product, image and context and we will continue to follow the same path.  French Connection continues to sell well-designed, stylish clothing that appeals to a broad market as we set out to achieve back in 1972.  We endeavour to sustain the vision and attitude that French Connection has developed over the years by cementing firmly in the minds of all who work with us that we have a worthy and credible tradition of successfully matching product, image and context with a company culture that nurtures talent and thus ensures longevity.

The fashion industry is in a state of constant flux and evolution, which designers must be fast enough to respond to.  To achieve this it is necessary to consider all new ideas and designs through the mind of the customer. Consequently we endeavour to find designers who closely identify with the lifestyle values of our customers, so that those same values become our own.

Business aims and operations
With this focus on fashion underpinning the business our aim is to generate increased shareholder value through the retail and wholesale of fashion products.

We design, produce and distribute branded fashion clothing for men and women to more than 30 countries around the world from our offices in London, New York, Hong Kong and Toronto.  Our long-standing success in this most competitive of markets is a testament to the skill, passion and dedication of our employees around the world.

Principal risks
As described above our business revolves around fashion and our success depends on our ability to produce ranges of garments which attract customers.  While we focus on ensuring that we achieve this, it is not possible to confidently predict the reaction from our potential customers to each season’s new ranges.  Our customers’ propensity to spend on clothing is impacted by their personal financial situation resulting in changes in the total size of the retail markets in which we operate.  However, the attractiveness of our ranges has the most significant impact on our business.

Brands
We operate under four principal brands, the most significant of which is French Connection accounting for around 80% of global turnover.  Our other brands include the highly respected designer label, Nicole Farhi, a home-shopping based ladies’ fashion range, TOAST, and a fashion basics range, Great Plains.  In addition the business owns YMC, a fledgling menswear brand and Scorah Pattullo, a designer shoe range.  Although each of the brands target different audiences they each generate high levels of respect in their chosen markets reflecting the passion and skill poured into the design and manufacture of their products.

French Connection
The French Connection brand operates in the fashion-orientated high street retail market offering a fashion-forward range of quality products at affordable prices.  Our customers, typically aged 18-35, appreciate that the brand is at the leading edge of high street fashion and offers quality and style in its products.  We design ranges of products for both men and women from underwear to outerwear, casual wear to suits, denim, accessories and children’s wear. 

Our design teams are based in London and we arrange for the products to be manufactured in specialist facilities in Europe and Asia.  The finished articles are available on high streets and in shopping malls through our network of branded retail stores in the UK, Europe and North America.  Department stores and multi-brand fashion stores also carry our ranges, bought through our wholesale operations based in London, New York, Milan and Hong Kong. 

To further extend the distribution we have granted franchises and licences for high quality retailers to operate French Connection branded retail stores in the UK, Middle East, Asia and Australia.  These customers are supplied through the wholesale channel in the relevant territories giving rise to three main geographic bases for our business as described below.  Our licensees in Japan, Hong Kong and China are joint venture businesses operated by our local partners in which French Connection holds a 50% equity interest.

Worldwide operations

Brand extension
Our French Connection and fcuk brands havebecome synonymous with contemporary fashion and have been extended into complementary licensed products including men’s and women’s toiletries, shoes, watches and eyewear which together represent the third major profit stream for the Group.  Our licences in the UK with Boots have produced a hugely successful range of toiletries for men and women. 

Management of the business
Founded by Chairman and Chief Executive Stephen Marks, French Connection’s long history of success has been based on the quality of the fashions, supported by hugely successful advertising and market presence resulting in one of the most highly recognised and respected clothing brands in the UK.  We ensure that our products are presented for sale in contemporary surroundings by knowledgeable and friendly staff who are in-tune with our customers.  We understand, however, that our products are the core element of our business and that our ability to produce fashionable clothes for our customers is the key to our continued success.

Our approach to managing the business is to ensure that our resources are deployed in the most effective and efficient manner to support the elements of the business which have a direct impact on trading.  Design and production of the ranges and maintenance of our retail operating standards are paramount for our managers who are given broad responsibility for their area of operation and are expected to generate continued improvements in results.

Growth and development plans
Following a challenging period during which our revenues have contracted, our primary aim in the short term is to recover sales volumes while maintaining or improving margins.  In the retail business our aim is to improve sales densities in our existing portfolio which will be evidenced by our key performance indicator of growth in our like-for-like sales.  In our wholesale business we aim to improve volumes with both existing wholesale customers and through recruiting new outlets, reported through the growth in total wholesale turnover.  Along with this we aim to improve our net operating margin through careful control of stock levels, margins and overheads.  Our key performance indicators in this area are the gross margins reported for each business segment and the Group net operating margin.  We target to re-establish a Group net operating margin above 10% and believe that this can be achieved in the medium term.

Following a return to a healthy net operating margin we aim to generate a steady growth in earnings through careful application of a development strategy.  This is based on self-funded, conservative, careful expansion of each of our channels when we can demonstrate them to be successful.  This development strategy includes:

• growth of UK wholesale volumes through existing and new channels;
• expansion of the UK retail portfolio and growth of our e-commerce business;
• expansion in continental Europe of retail, mail-order and wholesale opportunities;
• additions to our store portfolio in North America;
• expansion of the wholesale customer base and increase in volumes to existing wholesale customers in North America;
• support and development of licensees in the Far East and Australia;
• development of the retail joint ventures in Japan, Hong Kong and China;
• expansion of the geographic reach of licensed products beyond the UK and consideration of further brand licensing opportunities; and
• further development of our brand portfolio.