French Connection shares rocket as retailer looks for a buyer
Shares in French Connection were up a huge 32 per cent in early morning trading on the back of news that the brand is up for sale.
The clothing retailer yesterday confirmed that it is looking to sell, with founder Stephen Marks hoping to offload his 42 per cent stake.
Read more: French Connection founder is reviewing potential sale, company confirms
While Sports Direct billionaire Mike Ashley holds a 27 per cent stake in the firm, French Connection stressed that so far it has no buyer.
Nevertheless, shares rocketed this morning, trading 32 per cent higher before falling back slightly to 26 per cent, adding a whopping 11p per share to value them at 54p after closing at 42.9p on Friday.
The news comes after French Connection warned of deepening losses as it reported an underlying operating loss of £5.5m for the six months to the end of July.
“There is no doubt that progress has not been helped by the trading conditions in which we operate in the UK,” it said at the time, promising to return to profitability by year-end. “Although we can take great confidence from the performance of the wholesale business and the stability of the licence income.”
Read more: French Connection shares fall as losses widen on decreasing sales
Mike van Dulken, head of research at Accendo Markets, told Morning Wire that the business still has “only a tiny £55m market cap”, calling it “one of those brands that has fallen out of favour” amid the demise of the high street and growth in e-commerce.
“Its wholesale channel may be growing, but not its retail,” he added. “Not a great recipe”.
Sky News, which originally reported the possibility of a sale, said advisers at Numis have approached private equity firms and other fashion retailers.