French Connection gets loan to help US ops, says SS21 orders beat expectations
Fashion retailer French Connection on Friday announced a new funding package to specifically help its US business. And it also said that trading is tough as lockdowns in its core markets have dented sales, but e-tail is stronger despite it offering fewer markdowns than in 2019.
The company said the US business, which is based in New York, has secured $6.5million of additional funding through the Main Street Lending Program. That’s a US government programme designed to help small and medium-sized businesses and groups “that were in sound financial condition before the onset of the Covid-19 pandemic” and specifically supports US-based operations and employees.
It’s a five-year loan and the company doesn’t have to start paying it back before the end of year three.
Does the loan suggests that the US business was in trouble though? Not necessarily. But because it’s a mainly wholesale operation, it requires “a significant amount of working capital at certain times of the year to operate, which this will provide,” the company said.
Meanwhile, looking at its domestic market, French Connection said that while trading in the early part of the second half was in line with its expectations, as a consequence of the tightening of Covid-19 guidance in September, “footfall declined and conditions became slightly more difficult across the retail channels. This was then compounded by the full closure required during the second lockdown in November”.
That said, since stores in England reopened on December 2, “trade has been encouraging”. It added its e-commerce channels “continue to trade positively even though we have adopted a less promotional stance during the period than last year”.
And while that US loan shows that wholesale has clearly had its challenges, the company also said that its overall wholesale business “has performed well with our major online customers continuing to trade and take deliveries throughout the period. Spring 21 orders are currently ahead of our expectations”.
But it still sees "considerable challenges" ahead due both to the ongoing impact of Covid-19 and the uncertainty relating to Brexit, although it feels it’s “well positioned to capitalise on any opportunities that arise”.
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