Sears to sell FCUK?

Sears Holdings Corp is in talks with troubled British fashion label French Connection Group Plc to carry its clothes in stores, a spokeswoman for Sears said on Tuesday.

“We are talking with French Connection but do not have any information to share at this time,” Sears spokeswoman Lee Antonio told Reuters. French Connection could not be reached for comment.

French Connection reported a 69 percent fall in first half earnings this month. It said full year profits fall at the lower end of expectations.

www.fcuk.co.uk
September 2005

FCUK suffers in slowing retail climate

The slowing of retail sales combined with lower wholesale orders caused revenue for FCUK' for the past six months to decline to £117.9 million. This is 8 per cent less than the equivalent period last year. The group gross margin increased by 1.2 per cent to 55.1 per cent and operating costs increased largely as a result of increased retail selling space. Profit before tax was £5.1 million (2004: £16.2 million). Wholesale customers were also affected by the difficult trading conditions and were cautious with their buying. Revenue amounted to £39.5 million (2004: £51.4 million) and the gross margin was slightly lower at 38.5 per cent (2004: 40.7 per cent) due to a higher level of markdowns for stock clearance during the period.

The group traded from 16 per cent more space than the equivalent period last year, including four new stores opened in the six-month period, total retail revenue in UK/Europe was broadly flat at £51.1 million (2004: £51.2 million). The gross margin achieved was 67.1 per cent over last year's 65.8 per cent with support from both the weakening of the Dollar and increases in core margins. The fcuk buymail and Toast businesses have continued to develop and Toast's first standalone store in Harrogate has performed well enough to encourage the company to look for further sites.

Stephen Marks, Chairman and Chief Executive, said "In the current tough market conditions we remain focused on ensuring that our products meet the expectations of our customers while maintaining our operating standards and controlling costs. The recent signs of a positive response to the Winter ranges are encouraging, however we now anticipate that the outcome for the year will be around the lower end of the expectations we described in July".

September 2005