Embattled fashion chain French Connection has received two separate takeover approaches from potential suitors, it told investors this morning.
The retailer revealed that it had been approached regarding a takeover by retail investor Spotlight Brands, with backing from restructuring and investment group Gordon Brothers.
It has also received another potential proposal from brand investment platform Go Global Retail.
Takeover? French Connection has received two separate takeover approaches from potential suitors, it told investors this morning
After its share price jumped on Thursday, in a stock market statement today, French Connection said: ‘Discussions with both Spotlight and Go Global remain at a very early stage.
‘Accordingly, there can be no certainty that an offer will be made, nor as to the terms on which any offer might be made.’
Each of the two potentially interested parties have until 5pm on 5 March to ‘put up or shut up’ and confirm whether or not they wish to make a formal offer for French Connection.
The group’s share price is up over 36 per cent or 5.75p to 21.4p this morning.
French Connection has been struggling with dwindling footfall, sales and profits for a number of years and has been battling to keep up with online-based rivals like Asos and Boohoo.
Star connection: Amanda Holden out and about in London last January wearing French Connection
The retailer has had to shut shops at various points for lockdowns since the coronavirus outbreak.
In October, French Connection revealed it had sunk to an underlying loss of £12.2million in the six months, against a £3.6million loss by the same point the year before.
The retailer’s total revenue sunk by over 53 per cent to £23.9million over the period as a result of the pandemic.
‘The financial performance in the period is considerably worse than last year given the situation’, French Connection said in October.
In an update on 11 December, French Connection said it expected ‘considerable challenges’ to remain across its operations.
In the early stages of the second half of last year, the group fared reasonably well, but footfall started to drop off again in September, with problems ‘compounded’ in November by further shutdowns. The update was posted before the latest national lockdown, which has forced the retailer to shut all its high-street stores once again.
But, in a glimmer of good news, French Connection said its online sales had performed well over the last few months, even though fewer promotional offers were on available for shoppers.
The group said it wholesale arm continued to perform strongly, with Spring 2021 orders, at that point, ahead of expectations.
In October, the retailer outlined how it applied the furlough scheme to its staff.
It said: ‘From 24 March 2020, we asked all store and concession staff to accept the ‘furloughing’ of their employment at a reduced level of pay so that we could sign up to the UK Coronavirus Job Retention Scheme and implemented similar measures in our retail operations around the world.
Closed: French Connection currently has all its UK stores closed as a result of lockdown
Keeping up: French Connection has faced an uphill struggle keeping up with rivals
‘In addition, from 7 April 2020, we asked those head office staff, both in the UK and globally, who had a significant reduction in their regular work load either due to the nature of their role, or because they were unable to perform their role effectively remotely to accept the ‘furloughing’ of their employment and a reduced level of pay.’
Chief executive Steven Marks said the pandemic had been the most challenging period the firm, which he founded in the 1970s, had ever faced.
French Connection’s biggest shareholder is boss Mr Marks, with a 42 per cent stake, while Frasers Group, led by retail tycoon Mike Ashley, holds a 24.93 per cent stake.
Today’s update comes a year after French Connection scrapped plans to find a buyer following a search, and said it planned to focus on completing a major turnaround.
French Connection distributes its clothes through its own stores in the UK, US and Canada and through franchise and wholesale arrangements around the world.
The company became notorious for the use of the ‘fcuk’ initialism in its advertising campaigns in the early 2000s, but has since struggled to keep up with its rivals.