Oh FCUK: French Connection scrambles to secure funding as cash reserves dwindle
Embattled retailer French Connection warned this morning that it could run out of cash within months due to the coronavirus crisis if it fails to secure extra funds.
French Connection, which abandoned hopes of a sale in January and instead announced a turnaround plan, said it is in talks with “a number of potential funding partners”.
The high street chain said without additional funding, and if trading continues to be impacted by the coronavirus pandemic, its cash resources will “eventually be eroded in the coming months”.
Talks are “proceeding well” and it has made “good progress” on agreeing terms and due diligence, the fashion retailer, which was once known for its provocative FCUK branding, said.
French Connection, which has not posted a pre-tax profit since the year ended 31 January 2012, reportedly turned down an offer from All Saints chief executive Stephen Craig and two private equity firms at the beginning of the year.
The company said today it had struggled to access government support, although it had furloughed employees through the job retention scheme and was granted business rates relief.
Accessing other government support had been “challenging” due to “tight qualification constraints”, the firm said.
“To date we have been unable to access any further funding from these schemes,” French Connection said in a statement this morning.
“In the light of the Company’s current cash position and the continued expected weak trading environment, we have been in active discussions with a number of potential funding partners,” French Connection said.
“The board is confident of raising sufficient funds to support the business until the return of trading levels that are able to support the ongoing operations.”
Online sales were up 44 per cent over the last six weeks, and French Connection said it was beginning to see an increase in activity in Europe as lockdown restrictions have been eased.
The retailer is in talks with suppliers to secure extended payment terms and discounts, and with landlords to agree rent holidays or deferrals.