Clothing retailer French Connection said like-for-like revenue in the third quarter was flat compared to the same time a year earlier following the steep decline in the first half of the year.

The group said trading at its UK/Europe retail business improved during the period, although the market remains inconsistent. Gross margin levels were similar to last year.

French Connection, which reported a 9.5% decline in sales during the first half, said UK/Europe wholesale revenues continued to be below last year as a result of lower forward orders and reduced in-season business.

In North America, retail trading in the quarter was broadly flat on last year in both revenue and gross margin levels. Wholesale revenue continued to grow and overall trading for North America continues to run ahead of last year, it explained.

French Connection reiterated that its joint ventures in Asia are reflecting the retail market slow-down in China and Hong Kong, resulting in a small reduction in profit levels in the period.

"Group profit before tax for the third quarter was broadly in-line with our internal expectations but as ever the overall outcome for the year is dependent on the retail selling season over Christmas and New Year," it said in a company statement.

The group, which concluded a review of the UK/Europe retail business, added: "We remain confident that the initiatives being implemented and tight cost management will result in a steady and significant improvement in the revenue and gross margins in the business and will therefore have a positive impact on group profitability across the next two financial years."

The retailer has reduced inventory and have achieved a £5m year-on-year reduction in stock at the end of October 2012.

However progress on selling off its under-performing stores has been slow as demand for retail space remains weak.

Net group cash at the end of October was £10.6m.


Optos's full-year results beat consensus estimates, driven by increased sales geographically and helped by the roll-out of its latest Daytona device.

For the full year ended September 30th it delivered pre-tax profits of $23.4m (2011: $22m) on revenues of $193.2m (2011: $143.3m) - excluding an additional $3.2m income from the extension of previously-recognised finance leases. This was ahead of consensus estimates of $22.7m in pre-tax profits and $188m in turnover.

Helped by a growing direct and indirect sales force its two geographic segments both delivered double digit increases, with North American sales growing 26% to $147.8m and International sales growing 85% to $48.6m.

For the next financial year, Chief Executive Officer, Roy Davies stressed: "Our priority will be to execute on Daytona and continue our expansion into the ophthalmology market with the 200Tx device."

Still, progress has been made. There was $21m in revenues from Daytona, its next generation desktop retinal imaging device, with 329 devices installed this year. However, the timing of manufacturing scale up of Daytona contributed to a fall in gross margin from 64% to 57%. The year also saw accelerated growth in ophthalmology, with over 320 200Tx devices installed globally.

Given that its business model has changed from a pay-per-patient rental model to that where customers now acquire their devices outright or through finance leases it is hardly surprising that this is reflected in the sales mix. Outright sales of devices were $64.2m (2011: $37.6m) and new sales under finance leases of were $64.1m (2011:$37.6m). Revenues from operating leases fell to $52.5m (2011: $81.2m). With more customers entering into service contracts, recurring revenues from service and warranty grew to $15.6m (2011: $4.7m).

The results certainly pleased Panmure Gordon analyst Savvas Neophytou, who has reiterated his 'buy' recommendation and 320p price target.

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