Fashion chain French Connection yesterday said it expected its controversial new advertising campaign featuring a lesbian kiss to help reverse declining sales and rebuild confidence in the brand.
The campaign - under the tag "Fashion versus Style" - drew complaints from viewers after it showed two well-dressed women kung fu fighting in a basement before they embrace.
But French Connection said it was optimistic of a return to growth after results proved "a major disappointment" and showed annual profits had halved.
Declining sales amid criticism that its clothes were overpriced and unoriginal saw pretax profits fall 53 per cent to £15.7 million in the 12 months to January 31.
Its controversial advert attracted more than 100 complaints and the Advertising Standards Authority said last month it would investigate whether there had been a breach of its post-9pm broadcast restriction.
It is not the first time the group has caused controversy with its adverts following the use of its FCUK logo - a play on French Connection UK - successful for several years but now seen by many analysts as an old joke and a tired format.
French Connection said it was too early to give an accurate indication of whether its new clothing ranges and the advertising campaign were wooing back customers because it extended its winter sale through February in a bid to clear stock.
Operations director Neil Williams said: "Having said that, the products look good and the initial reaction seems to be OK.
"We are trying to get people back into the stores and the advertising seems to be working. People have seen it, which puts us at the front of minds.
"We don't go out to cause controversy, but it is one of those adverts which is eye-catching.
"Some people will like and it and some people won't, but it is interesting and innovative, which is what we try to be."
Sales fell from £265.7 million to £246.3 million last year.
And while the company would not give an update on current trading in its stores, it did reveal that its wholesale order book for its summer ranges was down 25 per cent. Orders for winter 2006 are also below year-ago levels.
Chairman Stephen Marks said: "The last year has proved to be the most difficult we have experienced for a considerable period of time.
"These results are a major disappointment to the board and we are doing all we can to reverse the decline.
"We are focused on improving our ranges and we believe that those for summer 2006 are another step forward."
Mr Marks, the group's founder and executive chairman, who owns 42 per cent of the equity, added: "This recovery is likely to be slow, developing season on season, as we rebuild confidence in the brand in a highly competitive market."
There has been speculation he will take the group private. Baugur, the Icelandic investor, has a 14 per cent stake.
Mr Marks, a reclusive entrepreneur who bankrolled the gangster movie Lock, Stock and Two Smoking Barrels, watched the company recover from a loss of £5 million in 1992 to a profit of nearly £39 million in 2003. Analyst Sanjay Vidyarthi at broker Teather & Greenwood said French Connection would be lucky to maintain profits in the current year.
French Connection admitted its North American retail business "continues to struggle".
It is in the process of a "complete review" of the operation and personnel.
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