US sportswear giant Under Armour may take over French Connection’s London flagship store on Oxford Street.
According to The Telegraph the two parties are in talks as French Connection looks to sell the leasehold to the store due to its weakening cash position.
French Connection is believed to be seeking £5m for the store, which is located close to Selfridges at the west end of the street and whose lease runs until 2025, having dropped the asking price from £10m.
The high street chain has come under severe pressure from activist shareholder, Gatemore Capital Management, to address its financial woes. Gatemore warned earlier this month that the business could run out of cash by the summer unless remedial action was taken and suggested it may have to give up the prime location store.
Gatemore began its pressure campaign last summer by writing to chairman and CEO Stephen Marks to demand the business take action to stem its losses. It called for Marks, who founded the business in 1972 and who controls 42% of its shares, to ditch the FCUK brand, close more stores, capitalise further on its licensing business, shake up its boardroom and split his joint role, which contravenes corporate governance guidelines.
In September French Connection posted a pre-tax loss of £7.9m on sales of £69.2m in the six months to 31 July. The brand has struggled to compete since its 1990s heyday as it has been squeezed between faster, cheaper rivals, such as Zara, at the lower end of its price bracket and more premium labels, such as Ted Baker, at the higher end.
This month Gatemore was joined in its campaign to effect change at the retailer by fellow shareholders OTK Holding and Zoar Invest; together they represent 15% of its shares.
Having had little engagement from Marks, prior to that point, some of their requests appear to be being actioned. Last week it was revealed the retailer had agreed to begin the search to find two new non-executive directors to replace Dean Murray (former CEO of Myriad Childrenswear Group) and Claire Kent (a former managing director of Morgan Stanley) who have been serving for nine years.
Thus far Marks has been intransigent on the point of his joint CEO and chairman role.
