French Connection has secured 15 million pounds in funding from Hilco Capital to help mitigate the impact of Covid-19.
The company has put in place the working capital facility for the next two years, which it expects will be enough to cover its cash requirements. The retailer has been unable to receive any of the government backed financing schemes.
French Connection expects its current net cash position to fall over the coming months due to working capital funding requirements and payments to HMRC, landlords and suppliers that were previously deferred due to its Covid-19 mitigation actions.
The retailer closed all its UK stores and concessions on 23 March in line with the lockdown, and said sales since reopening mid-June have been “low”, which it noted is to be expected with the country’s weak footfall.
French Connection positive as sales pick back up
However, the company was optimistic about things going forward. It said the conversion of customers in stores has been better than in the prior year period and sales volumes are growing by the week.
It has seen a 24 percent growth in online sales from its websites in the UK and US over the past 15 weeks and has continued to supply “a number of the predominantly online wholesale customers during this period”.
For its other wholesale customers, it has seen a “significant upturn” in interactions with those in the UK and Europe since stores began reopening in the regions. The collections of receivables from its wholesale customers were “better than expected” during lockdown.
The company has also taken a number of cost-cutting measures to mitigate the financial impact of the pandemic. This includes conversations with stock suppliers about “actively manage its Autumn/Winter 2020 inventory commitments to reflect its current expectations of trading during the season”.
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