FRENCH CONNECTION (LSE:FCCN)

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Delayed price:
17-04-2014 16:35:01
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Learning from Lauren

Celebrity insights into French Connection

I was brushed by celebrity on Thursday, but I've calmed down now. The catalyst was a blog I'd written on French Connection and whether its recent difficulties making a profit are because the high street is unfashionable or its clothes are (or indeed, both).

We know the high street is unfashionable, with increasing numbers of people preferring to shop out of town and out of body (i.e. on the Internet) and I proposed using What I Wore Today, a site that allows people to show off what they're wearing and where they bought it, as a means of gauging the French Connection Brand.

The result was inconclusive, although longer term monitoring of What I Wore Today might yield some interesting results. But arch-networker and financial anlayst Steve Baines tweeted:
Impressed to see @RichardBeddard is using @PoppyD's @WIWT for investment research: http://t.co/jn45lkC3
He added:
I think sourcing information from non-financial market sources is one of the key ways of generating superior investment returns over time.
Which is an interesting perspective, I think it might be important, but the cold hard numbers are more important.

@PoppyD is Poppy Dinsey, who founded the site. and Lauren Laverne is the radio 6 Music DJ who introduced me to Poppy Dinsey on her morning show, one of only two radio broadcasts I listen to regularly, the other being Today.

So imagine my delight when Poppy and Lauren began tweeting about French Connection. Delight because I could brag to my kids about my new-found celebrity contacts (the eldest gets a surprising amount of satisfaction cadging retweets from celebrities) but also because I'd expended my pool of research to somebody at the heart of high street fashion and somebody closely connected to the celebrity culture that often drives it. This is what they said:
PD: Interesting piece by @richardbeddard. I think French Connection is one of the few brands I've never owned/worn http://blog.iii.co.uk/kicking-french-connections-tyres/

LL @PoppyD @richardbeddard V interesting! I think FC coats are particularly strong, actually, but the daywear not so much.

PD: @RichardBeddard Really interesting. I think "high end high street" really suffers. Nobody wants to spend that much on non-designer

PD: @RichardBeddard People want super fast fashion on the cheap...or high end investment pieces. French Connection sits awkwardly in the middle.

PD: @laurenlaverne @richardbeddard I always like their Xmas party dresses, but it's just an awkward price point. (And I'm massively tight)

LL: @PoppyD @richardbeddard Good statement pieces, majority of stuff a bit too Karen Millen, though. Could be great!
Their followers agreed.

So what have I learned from my brush with fame?

They confirmed what the fashionable, young writers at Moneywise Magazine told me when I first started looking at French Connection years ago. The clothes are quite nice, but they're generally too expensive. They buy them sometimes, when they're on sale.

Poppy Dinsey's observation that high-end high-street really suffers reminds me I tend to lump the whole of the high street together. Companies like Next are doing so well operationally they take what I consider to be  risks with their finances, buying back shares rather than saving cash.  French Connection is awash with cash, but then, it's struggling to make a profit so arguably the cash is required as a buffer against potential losses and not a luxury investors can take for granted.

Companies like French Connection are doomed to struggle in recessions as their customers shift downmarket but they still have to pay the rent.

As to which is the better long-term investment, it's a tough one. Next has been successful so long, it's seems almost inconceivable it will stumble. French Connection has been struggling so long (though not as long!) it's difficult to conceive of a recovery.

However hard it is to believe these things, that is what the Thrifty 30's holding in French Connection, but not in Next, implies. Next will stumble (more accurately, the risk of Next stumbling, and the extent to which the shares would fall in value if it did, is sufficiently large I don't want to chance an investment), and French Connection will recover, probably.

I've got to explain why, when French Connection publishes its annual report later in the spring.

Comments

This is brilliant.

I only ever buy French Connection at the outlet shop in Gunwharf quays because it's an affordable way to invest in clothing which I'm not willing to splash out on. And when I do make purchases, they normally are the typical party dresses, think bodycon and sequins.

The problem is people are spending less money if they can get away it, and brands like French Connection are going to end up disappearing because they can't produce high end fashion, nor can they produce trends cheap enough for people to buy.

Thanks for the name-check here Richard. I think the inference from WIWT and it's users is that French Connection seems to be stuck in a relatively unattractive niche on the High Street, and doesn't appear to be getting much traction in changing this. While you might argue the valuation provides a good margin of safety, it's hard to see much upside being generated via a revitalisation in the fashion offering leading to an improving top-line.

To Becky above - I'm not sure that you can describe buying clothing as "investing".

Thanks for your comment Becky, everyone says the same thing. Someone must shop there regularly surely :-)

I agree. They either need something phenomenal like FCUK was, which seems unlikely, or they need economic activity to rise to the levels of the go-go years, which also seems unlikely! So it's going to be a long haul, and meanwhile there's the matter of massive lease commitments to torment me.

Becky may not be an investor but she certainly has a nose for value!

I've been looking at French Connection too but I haven't taken the plunge. Mainly as I reckon I'm probably in their target market (towards the upper age band maybe, but still...) and their range just doesn't float my boat. It just doesn't give me the warm feeling that I'm buying into a success.

However, I'm very impressed that you are now a social media star :) Here's a song by your new friend for you to enjoy...

http://www.youtube.com/watch?v=tX1DWlKmMoE&feature=fvwrel

Hi Step, thanks for your comment, and for the music. Nice, but I'm probably towards the upper age of the target market :-)

OK, everybody, it's definitely gone to his head...hasn't it?! Richard, some new profile pictures please - wearing some new threads...!

Funnily enough, I was just laughing with my missus about that v phrase today: 'investing in a good wardrobe' Sorry, correction: I laughed, she glared. People who trot out that old chestnut also appear to believe the more you spend the more you save in a sale! How about don't buy anything, now there's a radical savings approach...

Also truly perplexed how the average moppet can enthusiastically save up for an 800 pound handbag, but can't manage to put away a bean into a savings a/c all year?

Ridiculous but true. It did go to my head. But I'm over it now - really!

OK. Because I know you really want to know. Right now I'm wearing a v-neck from Next over a t-Shirt given to me at the end of a long and gruelling running race and a pair of Jeans from John Lewis. I don't think it warrants a new profile pic. It doesn't even warrant a pic on my What I Wore Today page. Oh Gawd. I've let the cat out of the bag...

As for the handbag. Well, before I had kids I spent £1,000 on a chair. Funny how perspectives change :-) There's hope for your missus yet...

[...] Learning from Lauren Laverne – Richard Beddard @iii [...]

S Baines: Impressed to see @RichardBeddard is using @PoppyD‘s @WIWT for investment research: http://t.co/jn45lkC3

WELL, SEEINGS AS YOU PUT IT THAT WAY, how about giving us the benefit by showing us what both of you are wearing. I'll show you mine if you show me yours. That's not an excuse to show Wexboy your "pretty white panties", you understand.

I dare you! ;)

It's all blue Mark. A blue v-neck from Next, a pair of blue jeans from John Lewis and a blue long sleaved T shirt from the Gap. I would take a photo but it's really not worth it!

Sounds very stylish, actually.

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