Stephen Marks is refusing to sit down with an activist investor that wants him to surrender his dual role as chairman and chief executive of the struggling fashion chain French Connection.
The retailer will update the City on first-half trading on Tuesday and Gatemore Capital Management, the US hedge fund that has built an 8% stake, is seeking a meeting with the full board to discuss ideas to improve its financial performance that were set out in a letter to the company in July.
Liad Meidar, a Gatemore managing partner, said it wanted the audience to discuss a turnaround plan under which the long-serving non-executive directors Dean Murray and Claire Kent would be replaced.
The pair have been on the board since 2008 so will soon lose their status as “independent” under the UK corporate governance code. Gatemore also wants the retailer to accelerate plans to shut unprofitable stores and to “move on” from using its well-known FCUK label.
“He [Marks] is not really willing to have an open conversation about why French Connection is underperforming,” said Meidar, who added that a wider shareholder base was unifying around its ideas. “You have a 41% shareholder who is running this business at his leisure, not for for the benefit of all shareholders.”
French Connection confirmed that Marks, who founded the business in 1972, would not be meeting any shareholders as part of the interim results roadshow, with briefings to be handled by other members of its executive team, which includes the new finance director, Lee Williams, who joined from its online rival Asos.
French Connection, which also owns the brands Toast and Great Plains, made a £3.5m loss in 2015. The shares are changing hands for 40.75p, giving the retailer a market capitalisation of £40m.
Marks has mapped out a plan for a return to the brand’s previous glories that involves shutting unprofitable stores and improving its ranges. The company has also enlisted the highly regarded fashion executive Christos Angelides, who has worked with Next and Abercrombie & Fitch, as an independent non-executive director. At its full-year results in March, Marks insisted the business was moving in the right direction.
Its recent collections have been well received by the fashion press, but any progress is against a backdrop of tough trading, with Next and John Lewis both reporting a fall in first-half profits last week.
