French Connection suffers on high streets Shares in French Connection fell more than 15 per cent after shrinking sales and dismal conditions for high street retailers pushed the fashion chain to an interim pre-tax loss. The struggling clothing retailer, which has issued three profit warnings in the past year, swung to a loss of £6.3m in the six months to July 31, down from a pre-tax profit of £700,000 in the same period last year. French Connection's UK retail arm - which earns more than half the group's total revenues - reported a like-for-like sales decline of 9.5 per cent in the period to £49m, while gross margin contracted 3.8 percentage points to 54.7 per cent, dragging the division to a £9.2m loss. Wholesale revenues fell 11 per cent year on year to £18.1m, which the group blamed on weaker orders for both summer and winter clothing. French Connection warned of a bleak outlook, noting that forward orders for winter 2012 and summer 2013 were both down 10 per cent compared with last year. The retailer has been hurt by aggressive promotions among its rivals, exacerbated by the soggy UK summer and London Olympics that combined to reduce customer footfall on the high street. "The past six months have continued to be very difficult for French Connection's UK/Europe retail business," said Stephen Marks, chief executive. We have completed our review of the retail business and have implemented a set of detailed initiatives designed to improve the performance of the retail division and the business in general. The group's clothing appears to have fallen out of fashion with cash-strapped consumers, who have deserted mid-range retailers during the economic downturn and either chosen to trade up or down with their purchases. French Connection, which trades from roughly 70 outlets in the UK, has responded by reviewing its local and European retail business in a move that is likely to result in the disposal of loss-making outlets. However, the group warned that the financial benefits from its review would take as long as two years to trickle down through to the company's results. French Connection has issued three profit warnings since last November, blaming its most recent two in May and August on woeful conditions facing retailers in recession-hit economies across Europe and the UK. The shares - which have lost three-quarters of their value over the past year - regained some of their early losses on Wednesday but were still trading down 10 per cent at 22.5p.