The UK fashion retailer French Connection (also branded as FCUK) has long had an up and down, roller coaster, sort of a love affair with its fashion conscious customers, on the British High Street and in its shopping malls.
This week French Connection announced its full financial results for the 2013 fiscal year ending January 31st, 2014. After losing money for several years, it is gradually turning the corner as its founder, who took the helm again in order to rebuild has cleaned house, sacked managers, reinvigorated the design departments and refocused the business on making money again.
Accordingly losses have been reduced on lower revenues, as unprofitable stores and business lines have been shed, and likely more bloodletting will continue through 2014 until the company is in balance again.
Total revenues for the year, derived from retail sales of its menswear and ladies fashion lines and home furnishings, plus international wholesale operations were US$303 million in the fiscal year to January 31st, 2014, compared to almost US$316 million in the previous year, as some stores were shuttered and fashion lines streamlined.
Despite lower revenues the company’s comprehensive net loss shrank from US$17 million to just US$11.2 million for the year to January 31st, 2014. Cash flow from operations were just US$2.6 million in the fiscal year just finished, compared to a negative US$6.7 million in the prior year.
After all the pluses and minuses on cash movements, the company finished the year with over US$45 million of money in the bank, and no debt, pretty much as it had the previous year too. This cash number is the key that gives Stephen Marks the time to fix the company, and he says that it could still take him a couple of years to get back to sensibly profitable trading levels again.
This is perhaps a case of him damping down expectations and, whilst opinion is divided, some analysts indeed think it could well happen sooner. The stock market seems to think so too and it has clearly been giving Mr. Marks the benefit of the doubt, rising strongly over the last five months.
French Connection was founded by Stephen Marks, as long ago as 1972 not long after the swinging sixties had swung to a close, and just a year after the famous French movie starring Gene Hackman of the same name came out. The company became hugely successful, going public in 1984 and, after a number of ups and downs, at one point was valued in the stock market for as much as US$800 million, in 2003, before crashing down to earth on more than one occasion since.
The current market capitalization of the company is about US$93 million; far from its peak of many years ago but much higher already than just a few months ago. Investment manager Schroders has invested and recently increased its holding to just over 12%.
As with other fashion chains, it can be very hard to maintain your relevance over such a long time frame, with successive generations of customers looking for, ever more rapidly, evolving iterations and definitions of cool.
At one point French Connection adopted one of its internal corporate abbreviations, FCUK, and used it in what was to become one of the most successful and ubiquitous advertising campaigns in fashion retailing history, for obvious reasons, in the early 2, 000’s.
The trick though, is to know when to pack it in and start something else, and French Connection stuck with the campaign for too long until nobody really wanted to know any more, everyone was sick of it and its connotations, and sales slumped. In its latest turn around FCUK is long gone, except as a brand extension for its stores and some of its merchandise, but is not pushed very hard in its advertising.
About Stephen Marks
Stepehn Marks, who today is 67, was born in north London, in Harrow, and went to the local high, or “secondary modern” school.
After winning a junior tennis prize at Wimbledon he went out to work as a salesman for coat manufacturer Andre Peters and French fashion brand Louis Féraud.
Finally in 1972 he went out on his own founding French Connection. Later, in 1978 he hired designer Nicole Farhi to lead the company’s design studio. They later had a child together and remained business partners in what became the Nicole Farhi label, even after their personal relationship came to an end.
By the late 1980’s the company was already in trouble going corporate and taking its eye of the ball in its operations. In a mea culpa with a local English newspaper, the Evening Standard, Marks was later to say he had been naïve, “I got too wrapped up with the City and merchant bankers.” Then Marks took control of the direction of French Connection again in 1991, taking a cue from Benetton and radically changing its image with the famous ‘FCUK’ advertising campaign ten years later.
Today the French Connection brand operates in 30 countries and Stephen Marks other business interests include the clothing and clothing/homewear brands Great Plains and Toast
As a keen tennis player Marks is a member of the All-England Club, which is centred at Wimbledon itself. Recognizing the inevitable snobbishness of the place, he has funded alternative ways for young kids to become tennis players, helping to establish tennis academies in the UK and Israel specifically to develop talented young players.
Current British Number 1 female tennis player Laura Robson was an early beneficiary of his Dukes Meadows academy in London. On the side, too, and maybe as a tax write off, Marks invests in film productions.