French Connection Group reports 486% EBITDA decline and 2.0 pp EBITDA Margin decline from 0.39% to -1.6%
15 Mar 2016 • About French Connection Group (
$FCCN) • By InTwits
French Connection Group reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- French Connection Group is a company in decline: FY2016 revenue growth was -8.0%, 5 years revenue CAGR was -5.1%
- The company operates at negative EBITDA Margin: -1.6%
- French Connection Group motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2012-FY2016 was 0.0%. On average EBITDA Margin was -0.8% for the sames years0
- French Connection Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.6%.
- The company has unprofitable business model: ROIC is at -8.4%
- It operates with high leverage: Net Debt/EBITDA is 5.4x while industry average is -0.3x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
French Connection Group ($FCCN) key annual financial indicators
| mln. £ | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 215.4 | 197.3 | 189.4 | 178.5 | 164.2 | -8.0% |
| Gross Profit | 103.6 | 94.6 | 90.2 | 83.4 | 76.0 | -8.9% |
| SG&A | 108.8 | 108.9 | 101.4 | 90.8 | 87.6 | -3.5% |
| EBITDA | 6.1 | -8.0 | -3.2 | 0.7 | -2.7 | -485.7% |
| Net Income | 5.3 | -10.3 | -6.0 | -1.5 | -3.3 | 120.0% |
Balance Sheet
|
|---|
| Cash | 34.2 | 28.5 | 28.2 | 23.2 | 14.0 | -39.7% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 1.6 | 1.9 | 0.8 | 1.1 | 0.8 | -27.3% |
Ratios
|
|---|
| Revenue growth | 0.7% | -8.4% | -4.0% | -5.8% | -8.0% | |
| EBITDA growth | -44.0% | -231.1% | -60.0% | -121.9% | -485.7% | |
| Gross Margin | 48.1% | 47.9% | 47.6% | 46.7% | 46.3% | -0.4% |
| EBITDA Margin | 2.8% | -4.1% | -1.7% | 0.4% | -1.6% | -2.0% |
| Net Income Margin | 2.5% | -5.2% | -3.2% | -0.8% | -2.0% | -1.2% |
| SG&A, % of revenue | 50.5% | 55.2% | 53.5% | 50.9% | 53.3% | 2.5% |
| CAPEX, % of revenue | 0.7% | 1.0% | 0.4% | 0.6% | 0.5% | -0.1% |
| ROIC | 4.7% | -16.9% | -9.1% | -1.7% | -8.4% | -6.7% |
| ROE | 7.3% | -15.1% | -10.1% | -2.7% | -6.0% | -3.3% |
| Net Debt/EBITDA | -5.6x | | | -33.1x | | 33.1x |
Revenue and profitability
The company's Revenue decreased on 8.0% in FY2016. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 2.0 pp from 0.39% to -1.6% in FY2016.
Gross Margin showed almost no change in FY2016. SG&A as a % of Revenue increased on 2.5 pp from 50.9% to 53.3% in FY2016.
Net Income marign decreased slightly on 1.2 pp from -0.84% to -2.0% in FY2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 0.49% in FY2016. French Connection Group showed almost no change in CAPEX/Revenue from FY2013 to FY2016. It's average level of CAPEX/Revenue for the last three years was 0.51%.
Return on investment
The company operates at negative ROIC (-8.44%) and ROE (-6.00%). ROIC decreased on 6.7 pp from -1.7% to -8.4% in FY2016. ROE decreased on 3.3 pp from -2.7% to -6% in FY2016.
Leverage (Debt)
The company has no debt. Cash dropped on 39.7% in FY2016.
Appendix 1: Peers in General Retailers
Below you can find French Connection Group benchmarking vs. other companies in General Retailers industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Just Eat ($JE.) | | | | 57.7% | 51.7% |
| Signet Jewelers Ltd ($SIG) | 9.1% | 6.2% | 5.7% | 36.3% | |
| AO World ($AO.) | 27.6% | 31.3% | 40.0% | 23.8% | |
| Caffyns ($78GL) | | -3.1% | 17.1% | 8.9% | 10.5% |
| Entu (Uk) Ltd ($ENTU) | 36.5% | 4.1% | -3.4% | 7.3% | |
| |
|---|
| Median (8 companies) | 10.8% | 12.6% | 11.4% | 8.1% | 31.1% |
|---|
| French Connection Group ($FCCN) | | -8.4% | -4.0% | -5.8% | -8.0% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Just Eat ($JE.) | | | 89.7% | 90.2% | 90.6% |
| Aa ($AA.) | 60.4% | 63.9% | 64.7% | 64.8% | |
| Stanley Gibbons Group ($SGI) | 43.7% | 43.2% | | 51.5% | |
| Signet Jewelers Ltd ($SIG) | 38.3% | 38.6% | 37.5% | 36.2% | |
| Entu (Uk) Ltd ($ENTU) | 32.4% | 36.4% | 31.6% | 32.5% | |
| |
|---|
| Median (9 companies) | 32.4% | 30.7% | 31.6% | 32.5% | 51.2% |
|---|
| French Connection Group ($FCCN) | 48.1% | 47.9% | 47.6% | 46.7% | 46.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Aa ($AA.) | 35.5% | 37.0% | 42.2% | 37.9% | |
| Just Eat ($JE.) | | | 16.3% | 21.0% | 25.8% |
| Signet Jewelers Ltd ($SIG) | 16.0% | 16.6% | 16.2% | 12.7% | |
| Entu (Uk) Ltd ($ENTU) | 7.4% | 6.7% | 10.3% | 8.6% | |
| Stanley Gibbons Group ($SGI) | 17.3% | 13.9% | | 8.6% | |
| |
|---|
| Median (9 companies) | 8.8% | 6.7% | 7.4% | 8.6% | 14.0% |
|---|
| French Connection Group ($FCCN) | 2.8% | -4.1% | -1.7% | 0.4% | -1.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Signet Jewelers Ltd ($SIG) | 2.6% | 3.4% | 3.6% | 3.8% | |
| Aa ($AA.) | 2.7% | 0.7% | 1.0% | 3.8% | |
| Lotte Shopping Co Ltd ($LOTS) | 7.1% | 6.5% | 6.6% | 3.8% | |
| Stanley Gibbons Group ($SGI) | 1.0% | 1.1% | | 2.4% | |
| Just Eat ($JE.) | | | 3.4% | 2.3% | 2.5% |
| |
|---|
| Median (9 companies) | 1.6% | 0.7% | 3.4% | 2.3% | 2.1% |
|---|
| French Connection Group ($FCCN) | 0.7% | 1.0% | 0.4% | 0.6% | 0.5% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Entu (Uk) Ltd ($ENTU) | 144.6% | 68.6% | 134.8% | 461.3% | |
| Caffyns ($78GL) | 60.8% | 15.4% | 11.1% | 37.3% | 10.4% |
| Aa ($AA.) | 138.0% | 134.4% | 61.1% | 34.9% | |
| Signet Jewelers Ltd ($SIG) | 21.6% | 21.5% | 20.4% | 15.5% | |
| Just Eat ($JE.) | | | 16.4% | 9.1% | 9.8% |
| |
|---|
| Median (9 companies) | 21.4% | 18.4% | 10.5% | 9.1% | 10.1% |
|---|
| French Connection Group ($FCCN) | 4.7% | -16.9% | -9.1% | -1.7% | -8.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Aa ($AA.) | 0.6x | -0.0x | 7.7x | 7.9x | |
| Lotte Shopping Co Ltd ($LOTS) | 5.1x | 4.9x | 5.2x | 6.7x | |
| Stanley Gibbons Group ($SGI) | -1.1x | -3.0x | | 2.3x | |
| Signet Jewelers Ltd ($SIG) | -0.8x | -0.5x | -0.3x | 1.7x | |
| Caffyns ($78GL) | 0.5x | 2.0x | 3.0x | 0.7x | 2.2x |
| |
|---|
| Median (8 companies) | -0.8x | -0.2x | -0.3x | 1.2x | 0.4x |
|---|
| French Connection Group ($FCCN) | -5.6x | | | -33.1x | |
