Business objectives, strategy, and business model
At the heart of our business is a passion for the clothes. In 1972,
when French Connection was conceived, we set out to create
well-designed, stylish clothing that appealed to a broad market.
We have since worked hard to build on that vision and as a result,
French Connection is synonymous with fashion and style.
It remains our prime goal to create distinctiveness in a crowded
market place through focus on design. The brand’s strength lies in
balancing new, exciting ideas with consistent quality and
affordability and in a world of “fast fashion” we are proud of our
commitment to the creative process.
With a passionate focus on fashion underpinning the business our
aim is to generate increased shareholder value through the sale of
fashion products and the extension of our brands into other
lucrative markets through licensing. We continually assess markets
and relationships for new opportunities to broaden our
Founded by Chairman and Chief Executive Stephen Marks,
French Connection’s long history of success has been based on
design quality and innovative fashion, supported by a strong
market presence resulting in one of the most highly recognised
and respected clothing brands in the UK and across the world.
We seek to ensure that products are presented for sale in
contemporary surroundings by knowledgeable and friendly staff
who are in-tune with our customers. We recognise that our
products are the core element of our business and that our ability
to produce fashionable clothing to match our customers’
expectations has been, and continues to be, the key to our
We seek to ensure that our resources are deployed effectively and
efficiently to support our business. Design and production of the
ranges and maintenance of our operating standards are
paramount for all our business managers who have broad
responsibility for their area of operations.
Our principal brand is French Connection which accounts for 82% of
the Group's revenues.
The French Connection brand operates in the fashion-orientated
market place 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.
French Connection designs, produces and distributes branded
fashion clothing, accessories and homeware for men, women,
and children to more than 50 countries around the world through
its main distribution channels: retail stores, ecommerce, wholesale
Our other brands include:
Great Plains: a fashion basics range for women designed
in-house. Available on-line and supplied through wholesale to
multi-brand retailers; and
YMC: an, edgy, contemporary fashion brand for men and
women available on-line, in two London stores and a growing
Each brand targets a different audience and has achieved high
levels of recognition for style and design reflecting the creative
passion and skill poured into the design and manufacture of
We design, produce and distribute branded fashion clothing and
homeware from our business premises in London, New York,
Paris, Düsseldorf, Hong Kong and Toronto. We operate retail
stores and concessions in the UK, Europe and US and
also operate ecommerce businesses in each of those territories.
Further, we wholesale our products to retailers operating in over
50 countries around the world and have licensed partners
operating French Connection stores across Asia, Australia and the
Our design teams are based in London and we arrange for the
products to be manufactured in specialist third party factories in
Europe and Asia supervised by local buying offices. The main
countries where manufacturing takes place are China, India
The Group retails garments through a network of stores on high
streets and in shopping malls across the UK, Europe and North
America and through concessions within leading department
stores such as House of Fraser. We also operate ecommerce
channels in the UK, Europe and North America. The product
ranges are also offered for sale at wholesale through our
showrooms in London, New York, Paris, Düsseldorf and
Hong Kong to selected customers operating department stores,
multi‑brand fashion stores and ecommerce sites around the world.
To further extend retail distribution we have granted franchises
and licences to quality retailers allowing them to operate
French Connection branded retail stores in Europe, the Middle
East, Asia and Australia. These customers are supplied through
our wholesale channels in the UK and Hong Kong. Our licensees
operating stores in Hong Kong and China are 50% Joint Venture
businesses operated by our local partners in those territories.
Our globally recognised French Connection brand has been
extended successfully into complementary licensed products
including men’s and women’s toiletries and fragrances, shoes,
watches, jewellery, eyewear and furniture. Our Design and
Licensing teams work closely with branded partners to develop
and enhance product for sale.
The continued growth of multi-channel retailing is a clear focus for
French Connection. We will continue to invest in the people and
systems to support this growth opportunity to ensure our
customers can shop with us however they wish and get the very
best multi-channel experience. The success of our CRM system is
an example of this investment.
||London, Paris, Düsseldorf
||UK, Europe, Middle East
||Retail stores and concessions, ecommerce
||Department stores, multi-brand stores, franchise operators
||Product and country licensing
||French Connection, Great Plains, YMC
||Retail stores, ecommerce
||Department stores, multi-brand stores
||French Connection, YMC
|Rest Of World
||Hong Kong, China
||Retail stores and concessions through joint ventures
||Brand licensees, concessions, department stores
||31 January 2018
||31 January 2017
|French Connection/Great Plains
|French Connection US
|French Connection licensed & franchised
|Total licensed & franchised locations
|Total branded locations
Principal risks and uncertainties
The Board recognises there are a number of risks and uncertainties that face the Group. The following
highlights some of the principal risks:
Fashion and design
Our success depends on our ability to produce ranges of garments which are attractive to potential
We seek to achieve this through retention of experienced and skilled designers and merchandisers and by
remaining as operationally flexible as possible particularly in relation to our supply chain and up
Each year the brands produce two main seasonal fashion ranges and the success of each of these is
largely dependent on the ability of our designers to reflect attractively the emerging trends in
fashion. We utilise a mix of experience and fresh thinking in our design studios under the consistent
guidance of the senior management to ensure continuity of the brand attitudes.
Brand and reputational risk
Our brands and the way they are perceived in their respective markets is very important to us.
We are very protective of the brands and work to ensure that they are presented in appropriate ways and
that they are not misused. A main driver for brand perception is the products themselves and therefore our
reputational risk is closely linked to our sales success.
The nature of fashion retail means that it is not always possible to predict customers’ reactions to each
season's new ranges. Our customers' propensity to spend on clothing is also affected by their personal
financial situation and other macroeconomic factors which impact the total size of the retail markets in
which we operate.
We consider that as a small operator at the upper end of the middle market the impact on our business
of macroeconomic elements is considerably smaller than the impact of the success of our designers in
producing attractive products.
The full economic impacts of BREXIT negotiations are currently unknown, although the Group recognises
that the impact of trading restrictions and tariffs with EU trade could have an
adverse impact on the Group. This is mitigated though the Group's suppliers predominantly being located
outside of the EU, as is trade. The Board will continue to monitor BREXIT developments and assess any
potential impact on the business
when there is greater certainty and clarity over potential outcomes.
The Group is exposed to supply chain operational risk if product is not delivered in a timely fashion, to
specification or in appropriate quantities.
The Group's supply chain is diversified across a number of suppliers in different countries. Our buying
offices and production teams work closely with suppliers to mitigate these risks.
The design process and our retail businesses in particular have a significant proportion of fixed costs
giving rise to operational gearing and this is exacerbated by upward-only rent reviews.
To mitigate cost pressures we are constantly focused on store operating cost efficiencies, and have
already achieved considerable savings by optimising our rostering timetables in store and actively
managing our store estate, and exiting stores where the opportunity is economically available to us.
The Group is exposed to financial risks including currency, interest and liquidity.
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have
sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the Group’s reputation. The Group monitors
its cash position on a regular basis through the use of regularly updated cash flow forecasts, and
believes that it has sufficient and appropriate net funds and facilities available.
As a wholesaler we also face the risk of default from our customers and manage this through active
relationship management by our dedicated customer accounts team. Our experience of bad debts has been
very low over many years due to this close management. We also insure certain overseas debt risk.
The principal treasury risks to the Group arise from exchange rate fluctuations. The Board has approved
policies for managing these risks, which are reviewed on a regular basis, including the
use of financial instruments, principally forward foreign exchange contracts. However, the Group is
naturally hedged for a significant part of its business and has limited exposure to foreign exchange
The Group is dependent on reliable IT systems for managing and controlling its business and for providing
efficiency and speed in the supply chain.
Our IT function oversees all the systems and has policies and procedures to protect the software, hardware
and data and to prevent unauthorised access to the systems.
The Group's approach to the management of risks is further discussed in the Corporate Governance Statement.
Key Performance Indicators
The Board considers that the key performance indicators for the businesses are:
Each of the above is discussed in more detail in the Financial Review.
- UK retail LFL sales growth;
- Sales achieved in the wholesale channels;
- Sales by geography;
- Gross margin %;
- Underlying operating profit/loss; and
- Inventory levels.