French Connection’s half year results announced today are deeply frustrating. Not the losses, the company warned of them, but the sketchy plan announced today to reverse them.

At loss-making UK and European stores profit margins fell as the company increased promotional discounting, which it had vowed to resist, to vainly combat falling sales.

The company emphasises its ''21m cash balance but that’s down almost a third compared to last year. It must act, or erode the cash until it needs to borrow, if it can, or raise money from investors, neither of which would be good outcomes for existing shareholders.

There is no plan beyond getting better at what the company already does by giving customers what they want (the right ranges at the right prices with more accessories), improving efficiency, recruiting better senior managers, and shedding loss-making stores where it’s economically viable.

To cut costs French Connection needs to close shops, but it’s hamstrung by the leases. Rents are still rising, albeit at a slower rate, and French Connection is tied into much longer leases than, say, Next, which is also doing much better. That means every year relatively few leases come up for renewal, and they may not be the loss-making ones.

The company is employing agents to find tenants for some of the properties, but every time I read a statement from the company, I expect to read about store closures. I never do, so maybe its cheaper to keep the loss-making stores.

It’s depressing, partly because I haven’t mentioned the profitable wholesale and licensing businesses, and that outside Europe French Connection is doing much better, but the fact is losses from European shops outweigh profits from all the other businesses.

Ten years ago people flocked to buy FCUK because they had more money and it was iconoclastic. Now they go to TK Maxx.

French Connection must become more competitive, or close stores. It’s plan acknowledges that but offers very little insight into how it will achieve its objectives, or candour about how difficult that will be.

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