French Connection confident, beating forecasts and raising dividend

There was a return to form for French Connection today, the fashion retailer that has endured several tough years and at times seemed in danger of going out of business altogether.

A radical restructuring led by chairman Stephen Marks and chief operating officer Neil Williams has borne fruit. By exiting several markets, selling Nicole Farhi and offloading the least profitable stores, the company has turned itself around.

Today it unveiled a profit for the year to January of £7.3 million. That's up from just £700,000 a year ago. It made losses in the two years prior to that.

In the good old days, French Connection paid a dividend to shareholders of 5p. This year it will pay 1.5p, up from 0.5p last time.

Williams said: "There has been a very significant improvement in underlying performance and we have a very strong balance sheet."

The rising price of cotton is a concern. "There's inflationary pressures," said Williams. "It's all fabrics, not just cotton. Our job is to try and mitigate that."

Sales rose 2% to £205 million.

With the highly criticised FCUK brand now in the background, founder Marks was upbeat.

"With our business back on track we are focused on creating great products that stand apart from the rest," he said.

Economic headwinds could prove tricky. Said Marks: "The current economic environment is clearly difficult and it appears likely that it will remain so in the coming year."

The shares moved up 2.5p to 122.25p. That leaves the company valued at £117 million.

The company employs 1500 in the UK.