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FASHION retailer French Connection has warned it will soon run out of cash due to coronavirus unless it gets extra support.
A potential collapse would affect French Connection’s 780 staff members working across its 76 UK stores and concessions.
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The retailer warned in a trading statement that unless it secures new funding or sales improve, it expects its cash resources to be “eroded” over the coming months.
French Connection said it has seen “a significant reduction” in sales after it was forced to close its UK stores in March due to coronavirus lockdown.
Online sales have risen 44 per cent in the past six weeks, but this only makes up a small proportion of the business, it added.
French Connection said that accessing government funding to support the business during the pandemic has been “challenging” due to the tight eligibility criteria.
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So far, the retailer has successfully applied for the coronavirus job retention scheme and business rates relief.
As a result, French Connection is now in talks with potential partners for urgent funding.
The retailer said it’s confident of raising sufficient funds to support the business until trading improved.
Yet it added: “Without securing additional funding and should the current Covid impacted trading levels continue, the company’s cash resources will eventually be eroded in the coming months.”
French Connection said it plans to reopen stores from June 1, in line with government guidance and in a “orderly manner” to protect staff and shoppers.
The struggling retailer, famed for its FCUK slogan, reported a £7.3million annual pre-tax loss in the 12 months to January 31, 2020.
Its cash reserves also halved from £16.2million to £8.1million during the same period.
The retailer is the latest one to report difficulties following the coronavirus crisis, with half of chains facing administration by the end of the summer.
Debenhams has revealed 16 of its UK shops won’t reopen once lockdown is eased.
While fashion store Animal plans to shut all 21 UK stores, putting 500 jobs at risk.
In October 2018, struggling French Connection confirmed it could be sold.
A year earlier, Sports Direct boss Mike Ashley paid £4million for 10.7million shares in the fashion chain.
Shareholders have also previously demanded French Connection “should be broken up” after several annual losses.
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