French Connection rallies as it reports strong winter trading

(ShareCast News) - Shares in French Connection surged after the fashion retailer said its performance in winter was better than expected and announced the closure of more stores.In a trading update for the 16-week period ended 21 November, the group said sales of the winter collection have continued to be strong after the promising start to the season highlighted at the interim results.Like-for-like sales in the UK and Europe for the period were up 0.2% compared with a 6.1% drop a year earlier, while full-price LFL sales were unchanged at 6%.The gross margin achieved during the period has risen over last year by 1.5% as the full price sales mix has increased, coupled with improved input margins.Chairman and chief executive Stephen Marks said: "I am pleased to report that the performance of the group has improved considerably compared to the first half of the year, particularly in the UK/Europe retail stores and while we still have the all-important Christmas period to come, we expect the results for the full year to be in line with market expectations."French Connection said it expects to close a further seven non-contributing stores during the second half of the year.In addition, due to the redevelopment of the building, the company will vacate its Regent Street, London store at the end of March next year, at which time it will receive a compensation payment of £2.4m, while also removing the ongoing trading losses of the store.Numis upgraded its rating on the stock to 'add' from 'hold' following the update, pointing to supportive signs."In all, we are encouraged by the improved trading trend, accelerated closure of loss-making stores, which should underpin solid progress in FY17, and the ongoing evidence that French Connection can profitably leverage its strong global brand," it said.At 0950 GMT, shares were up 10.2% to 33.46p.