All eyes on Mike Ashley as French Connection up for sale
Fashion brand has failed to made a profit in the past five years. Can Ashley save it?
French Connection has had its struggles on the high street. Photograph: Hannah McKay/File Photo/Reuters
As news of a possible sale of fashion group French Connection – also branded known as FCUK – emerged on Monday, talk surrounding a possible suitor focused on one of the biggest cheerleaders of the UK retail space, Mike Ashley.
Ashley’s Sports Direct holds more than 26 per cent of FCUK, the second-biggest shareholding after the company’s founder, Stephen Marks, who has more than 39 per cent.
It’s unclear why FCUK is considering a sale at this point in time, although the fact that it hasn’t made a profit in the past five years might give us a clue.
Investors seemed pleased with the news as the company’s share price rose as much as 45 per cent in early trading in London before settling toward the end of the day up by 28 per cent.
If Ashley is interested in buying it, how would a new entity look?
One would imagine it’s current high-street presence would shrink or even be absorbed into House of Fraser, which was rescued by Sports Direct for £90 million (€102.5 million) in August.
Ironically, the collapse of House of Fraser earlier this year left FCUK having to make a bad debt provision of £800,000.
Nevertheless, it was confident when it issued half-year results that House of Fraser’s regeneration under new management represented “potential opportunities to expand overall”. Whether Ashley has the same confidence remains to be seen.
Then there’s ongoing speculation about a merger between House of Fraser and Debenhams, another company in which Ashley has significant influence through Sports Direct’s 27.5 per cent shareholding. A merger of that ilk could well help FCUK and deliver it to a wider high-street audience.
French Connection has had its own struggles on the high street. Another provision it flagged for the six months to the end of July was £6.4 million for “onerous lease contracts”.
Can Ashley be the saviour of French Connection? Only if he gets it for a knockdown price.