Is Spread Betting French Connection Shares the Latest Trend?
LONDON, May 18, 2012 /PRNewswire/ --
As the fashion chain reported continuing losses yesterday morning, investors will be looking at ways to potentially profit from French Connection's falling share price. We explain what happened and how you can spread bet their falling shares with City Index.
Since their provocative 'FCUK' campaign secured their position as a key player in the retail industry in the late nineties - the fashion chain has been overshadowed in recent years as the high street is saturated by fast fashion retailers.
Yesterday morning [Thursday 17 May], the French Connection Group PLC - which encompasses men, women and children's clothing as well as homewares - issued a profit warning as sales and revenues continue to fall.
French Connection: The Losing Trend
In 2011, a loss of £8.2 million was incurred and it has now been stated that sales in the past three months of trading were down a "disappointing" 12%. They also admitted that profits were "unlikely" to meet current estimates made by market analysts.
As a result, investors reacted negatively to the news; causing shares in the group to fall 12% in early morning trading.
French Connection cites the cause for this ongoing loss to be due to 'consumer caution' and 'ongoing economic difficulties'.
However, the company - which opened its first store in 1970 - is not giving up just yet; having endured the loss of their high-end sister brand, Nicole Farhi, in 2010; they began a strategic review of their UK retail operations in March this year.
French Connection: Back in Fashion?
The question now is: 'Can French Connection claim back its place on the high street - or is too late?'
The first step is deciphering where it went wrong.
Consider their campaigns; they continue to provoke and challenge with rhetorical questions and simple yet powerful photography.
So why have consumers stopped, well, consuming?
Whilst they cited 'consumer caution' as a reason for their continuing loss of revenue, their neighbours on the high street continue to profit; Topshop - part of the Arcadia Group powerhouse - are experiencing exceptional success both in the UK and oversees.
Comparing the two, the differences are barely noticeable; their designs and products are almost mirror images of each other, and they both have a powerful online and social presence.
However, there are two key differences; price range and quality. French Connection is considerably higher on both counts; higher quality and higher prices.
Whilst French Connection bosses mutter the words 'consumer caution', they should be re-focussing on 'consumer demand'.
Consumer Demand: The New Trend
Consumer demand has changed ten-fold in recent years.
Looking at Topshop's success - it is based around fast fashion; clothes for now at a price range for now.
It could be said that if French Connection wants to increase their revenue, they are going to have to reduce their quality in order to increase their quantity.
How to Spread Bet French Connection Shares
With spread betting provider City Index, you can take a position on the French Connection DFT across their range of professional trading platforms and speculate on the future price movement of the underlying market (French Connection Group PLC).
With the ability to go long and short on a market; you can potentially profit from both a rise and fall.
Remember, you do not own part of the underlying instrument, and you can incur losses greater than your initial deposit.
Why Spread Bet with City Index
Today more and more individual traders are discovering the benefits of derivatives, and many of them are discovering them through a City Index trading platform.
As a group, we transact in excess of 1.5 million trades every month in over 50 countries. We provide access to a wide range of instruments including margined foreign exchange, CFDs and, in the UK, financial spread betting with City Index.
We constantly look to improve the performance of our platforms and expand our range of services. The result is our customers benefit from innovative trading tools with transparent pricing, competitive spreads, and a high standard of customer support. Visit http://www.cityindex.co.uk/ for details.
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