The news that Sports Direct has bought Schroders’ 11% stake in fashion chain French Connection has raised eyebrows in the city.
Sports Direct owner, Mike Ashley has made forays into other businesses in the past, building up stakes in Debenhams and JD Sports for example. But this new investment represents a move to the higher end of the high street. French Connection reacted positively to the news by stating that it sees the investment ‘as a vote of confidence in the true potential of the company’.
However, French Connection is a brand in trouble. It is a long way from its heyday when the eponymous FCUK t-shirts propelled its value to a high point of around £500m. Now, the brand is blighted by financial losses and a stale image.
YouGov BrandIndex data reflects the struggles the brand has had over the past few years and how it has been losing out to other high street retailers.
We track over 35 high street fashion retailers. Among all respondents, French Connection is bottom when it comes to whether a brand provides good value for money. It ranks far higher when it comes to quality (in sixth), but French Connection clearly has an issue.
One of the main problems is that since its heyday, competitors have emerged that better reflect the needs of consumers, not just in-store but online. Comparing French Connection to two other fashion brands – H&M and Zara – illustrates the problem it has. Among those aged 18-34, Zara is ranked better when it comes to value (+5 vs. -10), but also when it comes to quality (+25 vs. +24). And although French Connection is rated as better quality than H&M (as you would expect), it loses out significantly on the value front.
Looking specifically at whether 18-34 year-olds would consider purchasing something from different high street clothing brands, once again French Connection currently finds itself in the lower end of the list, with a score of +4. This compares unfavourably with H&M (+30) and Zara (+15).
Therefore the question is why Mike Ashley has bought a sizable stake. French Connection needs rejuvenation and to re-establish a clear identity that appeals to consumers.
Indeed, it seems the brand may have been a victim of its former success, unable to reposition itself after its once dominant FCUK line became dated. The good news is that it still has a reputation for quality but a key challenge is to make people think the brands clothes are worth shelling out for. Given much of Mike Ashley’s success to date has been at the lower end of the high street, it will be interesting to see what happens next.