Good evening. I am writing this on Sunday 20 Mar 2016, and it's the last article from last week to catch up on, then we'll be fully up-to-date. So my apologies for the delay.


French Connection (LON:FCCN)

Share price: 45p
No. shares: 96.3m
Market cap: £43.3m

(at the time of writing, I hold a long position in this share)

Results y/e 31 Jan 2016 - looking back through the archive here, I've written about this share 19 times! It's a fascinating special situation in my view - an international fashion brand which is doing well in licensing & wholesale, but which has a disastrously loss-making retail division.

The investment opportunity, as I've said many times before here, is that the retail stores are gradually disposed of, hence shrinking the retail losses, which in the end should result in a decently profitable business.

So the only question really is whether the cash pile will see the company through the roughly 4-5 year process of disposal of loss-making shops (the average lease length is now 4 years). A couple of years ago, things were looking touch & go on that front, as losses were mounting, but I'm fairly comfortable that the cash should last until the group overall becomes profitable.

Interim results were dreadful - a loss of £ 7.9m (£ 4m worse than prior year H1) in the quieter 6 months of the year gave investors a fright, and you could have picked up stock as cheap as 23p last autumn (I know, because I did!). There's often a good trade on FCCN shares each autumn, as often people panic sell after poor interims, forgetting the seasonality of the business, where H2 is usefully stronger.

This year the seasonality was particularly pronounced, because the company had a poor spring/summer season, with clothing ranges not working well. Better performance ensued in H2. So the H1 underlying operating loss was - £ 7.9m, but H2 produced an equivalent profit of £ 3.2m, giving a total loss for the year of - £ 4.7m. That's not too bad, given that we already knew H1 had been a disaster. Although it's still a step in the wrong direction compared with a near breakeven result of - £ 0.8m in 2014/15.

This table shows the key breakdown of profitability, over the 3 activities of the group (retailing, wholesaling, and…

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