French Connection investors call for boardroom shake-up
French Connection shareholder Gatemore Capital said it fears the struggling retailer could run out of cash this year and is in need of a shake-up at boardroom level or should be sold, according to reports.
Gatemore has been calling for change at the business since last year and has written to founder, CEO and chairman Stephen Marks to say it is concerned “about the company’s utter lack of progress in improving its operating performance,” The Sunday Times reported.
The retailer has been struggling to return to growth for several years and most recently reported a pre-tax loss of almost £8m in the half-year to July 31 on sales down to £69.2m from £75.8m. However, it also said its comparable sales and margins rose in the period.
Gatemore is one of three investors who between them own 15% of the firm and are calling for change in its corporate governance. While corporate guidelines recommend splitting the CEO and chairman’s role, Marks is unwilling to do this.
The investors also want two independent directors to step down, saying their presence on the board for nine years means they cannot be seen as independent and that their tenure has included an unprecedented period of decline at the company.
At an operational level, the investors have been calling for French Connection to drop its Fcuk brand, to close more stores and target younger shoppers. And they have also called for the firm to examine a potential sale to “the highest possible bidder”.
However, they would struggle to force Marks to act given that the man who founded the firm 45 years ago holds a 42% stake. French Connection has not commented on the report.
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