French Connection secures injection from Hilco to help with pandemic fallout
Fashion retailer French Connection has agreed a £15m liquidity deal with buyout group Hilco Capital to help keep the business going for another two years.
French Connection said a deal had to be found as it was ineligible for the government’s coronavirus support schemes.
Hilco will provide the retailer with a £15m working capital facility, which it said will be sufficient to cover its cash requirements based on current trading expectations.
French Connection, which has not posted a pre-tax profit since January 2012, was said to have turned down similar liquidity offers from All Saints chief executive Stephen Craig and two private equity firms at the beginning of the year.
In a trading update to investors today, French Connection said initial sales since reopening its store network on 15 June have been low.
However online sales for its US and UK websites are up 24 per cent in the last 15 weeks.
“The company has taken a considerable number of actions, given the significant reduction in sales, to reduce costs and conserve cash throughout the ongoing pandemic disruption,” said the retailer.
“Although the stores have reopened… it is too early to predict how quickly and to what extent store footfall and therefore sales will recover.”
It declined to provide guidance on profit for the upcoming year given the ongoing uncertainty.