Little strength in numbers

French Connection‘s 2011 results seemed to herald a recovery, but the fashion retailer has suffered a French correction. The good news is it’s still profitable. The bad news is profitability has fallen to meagre levels when investors expected an improvement.

My spreadsheet shows an F_Score of four out of nine, five really because the share issue was minuscule and part of executive remuneration as opposed to say, a fund raising, so it’s is no reflection on the financial strength of the company.

An F_Score of five is the minimum I require to add shares in a company I think is recovering, after all, a recovering company should be getting healthier. Profitability is the single most important factor in judging a company’s financial health, though, and all four failures measure profitability, or the drivers of profitability, profit margins and asset turnover.

Deciding whether to add more French Connection shares to the Thrifty 30 is going to be another borderline decision.

I’ll discuss what’s holding French Connection back (its stores) in upcoming posts on leases and, of course a summary two minute monologue.