Our Business

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
customer reach.
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
continued success.
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 86' 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, e-commerce, wholesale and licensing.

Our other brands include:

TOAST: a range of beautifully crafted ladies' and men's clothing and unique homeware, available on-line, in selected John Lewis stores and through branded high-street stores;

Great Plains: a fashion basics range designed in-house and supplied through wholesale to multi-brand retailers and available on-line mainly in the UK; and

YMC: a fledgling, edgy, contemporary fashion brand for men and women with two stores in London, a growing wholesale base and available on-line.

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 their products.

Our operations

We design, produce and distribute branded fashion clothing and homeware from our business premises in London, New York, Paris, Dusseldorf, Hong Kong and Toronto. We operate retail stores and concessions in the UK, Europe, US and Canada 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 Middle East.

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 and Turkey.

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, Dusseldorf and Hong Kong to selected customers operating department stores, multi-brand fashion stores or 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.

Brand extensions

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.

Current trends

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 click and collect program is an example of this investment.

Principal risks and uncertainties

Our success depends on our ability to produce ranges of garments which are attractive to potential customers. 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 front commitments.

The nature of fashion retail, however, 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 however, 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.

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.

We have mitigated and smoothed fluctuations in demand by developing our licensing businesses which provide a more stable and predictable income stream.

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 costs efficiency, 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.

Our brands and the way they are perceived in their respective markets is very important to us. We are therefore 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.

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 Group maintains a positive net cash balance throughout the year and we are conscious to manage the Group's working capital effectively.

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.

The most significant exposure to foreign exchange fluctuations relates to purchases made in foreign currencies, principally the Hong Kong Dollar. The Group's policy is to reduce the risk associated with purchases denominated in currencies other than Sterling by using forward fixed rate currency purchase contracts. There has been no change since the year end to the major treasury risks faced by the Group or the Group's approach to the management of these risks.

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:

  • UK retail LFL sales growth;
  • Sales achieved in the wholesale channels;
  • Sales by geography;
  • Gross margin %;
  • Underlying operating profit/loss;
  • Inventory levels.

Each of the above is discussed in more detail in the Financial Review.

Worldwide Operations


Locations London, Paris, Dusseldorf
Territories UK, Europe, Middle East
Retail Operations Retail stores and concessions, ecommerce
Wholesale Customers Department stores, multi-brand stores, franchise operators
Licensing Product and country licensing
Brands French Connection, Great Plains, Toast, YMC

North America

Location New York Toronto    
Territories USA Canada    
Retail Operations Retail stores, ecommerce Retail stores, ecommerce    
Wholesale Customers Department stores, multi-brand stores Department stores, multi-brand stores    
Licensing Product licensing      
Brands French Connection, YMC French Connection    

Rest Of The World

Location Hong Kong      
Territories Hong Kong, China Australia, Asia, South Africa    
Retail Operations Retail stores and concessions through joint ventures      
Wholesale Customers   Brand licensees, concessions, department stores    
Licensing Product licensing Product licensing    
Brands French Connection French Connection    

Retail Locations

    31 January 2015 31 January 2014
  Locations sq ft Locations sq ft
Operated locations  
French Connection Stores 62 183,358 66 202,770
French Connection/Great Plains Concessions 55 35,363 51 33,560
Toast Stores 11 13,425 12 15,384
YMC Stores 2 1,355 2 1,355
  130 233,501 131 253,069
North America  
French Connection US Stores 6 19,719 7 22,841
French Connection Canada Concessions 7 18,125 9 24,325
  13 37,844 16 47,166
Total operated locations   143 271,345 147 300,235
French Connection licensed and franchised  
UK/Europe   7 8,527 7 7,994
North America   1 2,000 1 2,000
Middle East   9 17,895 6 9,805
Australia   74 75,544 72 72,112
Hong Kong   8 12,892 5 6,062
China   27 31,959 23 34,960
India   89 47,712 110 60,782
Other   35 32,347 48 44,516
Total licensed and franchised locations 250 228,876 272 238,231
Total branded locations 393 500,221 419 538,466

Salary Statement