French Connection, the apparel retail brand that struck gold when it changed its brand to closely reflect an old Anglo-Saxon profanity hit losses of £3.6 million for the six months as customers deserted the now tired and jaded brand.

Stephen Marks, the chairman and 42 per cent shareholder, admitted that his recovery plan in the UK and Europe was moving more slowly than he had hoped and that the problems he faced last year had spilled over into the current financial year. A drop of 10 percent sales in the USA compounded this.

Recently reworking the brand has allowed for an upturn in sales with predictions of a second half increase of 3 percent.

Margins are likely to move up as the number of ‘out of season’ sales of excess stock have decreased stress on the business.

The stock price was up just over 2 percent to 211 on the news.
 

The Bank of England’s monetary policy review committee managed to pull a rabbit out of the hat this afternoon. In a move that most had discounted, the MPC announced at noon that for the first time in eleven months it would increase interest rates in the UK to 4.75 percent.

Whilst the MPC has been generally ‘soft’ on interest rates over the past few years, nevertheless, world markets and economics may have forced the hand this time. Globally interest rates are on the up, with even the Bank of Japan increasing rates last month. The EBC and the Fed are also expected to increase rates today and next week respectively.

The increase should also have been expected as fears of inflation (up to 2.5% in June) in the UK are growing due to a number of factors. The most obvious one at the moment being the massive increases in the costs of energy, both oil and gas – and the knock on effect that has.

At the same time, the banks and building societies are expected to increase the cost of borrowing later this afternoon. This will hit many householders badly as prices were starting to rise again. The cost of mortgages will probably go up by 0.3 to 0.35 percent if previous reactions are anything to go by.

Its likely that this will be the last raise for some time, depending on factors over the next few months. If anything, one more rise is likely to come in October/November timeframe. Though the major effects of the Fed and BoJ will more likely be the determinants.

The Business News Source thinks this is a good move by the MPC, moving interest rates up at this point will certainly cool spending and hopefully will send a clear signal to the housing market.

Good news from the high street, Marks and Spencer has announced that it is to expand and hire an additional 4,000 staff. Whilst other high street retailers have suffered over the last few months it seems that M&S has managed to turn its business around finally after many false starts.

Like for like sales in the 13 weeks to the beginning of the month where up 8.2%. First quarter food sales climbed 5.8%, while clothing and homeware increased by 10.5%.

M&S has had a number of false starts over the past few years, but new management have improved the offerings to customers, turned around morale at the company. At the same time the company took a bold move to start advertising for the first time in its history, spending £45m on a very well received campaign that included both young and older models – including sixties fashion icon, Twiggy.

M&S have also increased and promoted its food only outlets – branded Simply Food – it expects its market share to increase to 5% up from its current 4.1%. M&S have aggressively pushed these outlets into unique markets including sell at Motorway (Freeway) service stations.

During its downturn in 2000 M&S closed most of its European stores, sending Parisians into a panic about where they could get such simple British staples as the sausage, bacon and of course, the M&S sandwich. The company now feels confident again and is looking to expand into overseas markets trading off its brand through franchising. It expects to open one store every week at least for the next three years, which will take its number of overseas stores to 350. Certainly this correspondent takes umbrage at being able to buy plain M&S biscuits (cookies) in Bangkok of all places.

Before its downfall in 2000 M&S had made disastrous inroads into the USA with the purchase of upmarket men’s clothing institution, Brooks Brothers. Before unloading it to the Italian billionaire Claudio del Vecchio’s Retail Brand Alliance.

M&S was up 5.5 at 588.5 pence at 13:16 on Tuesday.

Source

Sales boost keeps M&S recovery on track Independent

UK retailer M&S says recovery on track Reuters

Just a reminder that we have a house style and we will only submit articles that comply with our guiding principle – The Business News Source holds a view that, whilst not exclusively contrarian, punches through the hype seen all too often in the financial news today.

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The Editor

The worst kept secret of the weekend is that giant UK retailer Tesco is considering making a bid for the Polish arm of French rival Casino.

The bid is likely to top €800m, though Tesco may have to bid against the French super giant retailer Carrefour. Tesco is already a big player in the rapidly growing Eastern European market where it sees still more opportunity, as a group it made more than £2.25bn underlying profit last year.

Tesco pretty much already dominates Hungary, and is using its Eastern European powerbase to push further into the other growing states – last quarter Tesco’s international stores contributes over 15% growth. We should expect more of these sort of initiatives over the upcoming months.

Most watched will be Tesco’s more recent planned move into California – stepping on the toes of super giant Wal-mart – if Tesco can grow here at the same rate it rolled out into Eastern Europe then the California dream will drive Tesco into a new position as a true global retailer. Let’s not forget though, that many British retailers have already tried and failed this el dorado (M&S – Brookes Bros).