Thirty years ago Stephen Marks was known to his old friends as “Number 15” – a playful reference to the French Connection founder’s British ranking in the rich list. Last year Marks didn’t even make the list as the value of his French Connection shareholding dwindled, along with the retailer’s sales, profits and share price.
By all accounts the only thing that French Connection has increased over the past nine years is losses.
The company’s fall from grace has been pushed into the spotlight by activist investor Gatemore Capital, which has recently joined forces with two other shareholders to agitate for an overhaul of the business.
Their key area of criticism is Marks’s controversial holding of both chief executive and chairman roles.
“I don’t think he expected this wolfpack situation”, says Liad Meidar, Gatemore’s managing director, speaking from his office on London’s Cavendish Square. “We are corporate crusaders, and how Marks has been able to keep both roles for presiding over such destruction of value is inexcusable. No other retail chief executive or chairman would still be in their job after eight years of losses.”
While most listed companies have problems that are considered to be bigger than one man, the biggest stick activists have to beat French Connection is that the septuagenarian refuses to relinquish control.
Dark clouds now loom over the future of the company’s founder, whose early years were an entrepreneur’s fairytale.
The French Connection founder had been a former Wimbledon Boys tennis competitor with dreams of being the next Fred Perry before he was forced to abandon the pursuit because his parents could not afford to support his sporting career.
Instead of sprinting about the courts, he became an apprentice making coats for a London tailor who worked with Louis Feraud, the French designer who created wardrobes for Brigitte Bardot. After joining Feraud on a successful collection, Marks walked out of the business.
He had been offered a director’s position, but no equity. “You can call me a tea boy for all I care but I’ve been working my butt off … so I deserve some more money”, Marks has said of his early career experience. Wanting to make his own name, Marks launched a successful import business shipping hot pants to the UK from Paris. The self-styled hot pants king’s next venture was his own label. The brand Stephen Marks London designed coats and suits and grew to £700,000 in sales within three years.
The future of French Connection was set when he visited Hong Kong on behalf of a Parisian friend, who had ordered 250,000 cheesecloth shirts. The trip made him one of the first retailers to spot the potential of the cheaper suppliers in the Far East and in 1972 Marks decided to set up his own company. That company became French Connection, named after the film starring Gene Hackman which had come out the year before.
From the start, French Connection lured shoppers and sales doubled every year for eight years. Then in 1983 Marks decided to partially cash in with a stock exchange listing. His introduction to City life was met with calls for compliance with corporate governance codes, which he bowed to by bringing in managers. Growth at French Connection stalled, with Marks blaming City interference.
“It didn’t work out too well, so we got rid of them, sorted it out and got going again”, Marks has said about the brief period when his hand wasn’t firmly on the tiller.
It is perhaps this experience that has made him so resistant to releasing the reins this time around.
Once back at the helm, Marks decided the company needed a jolt of new energy and hired Trevor Beattie to be French Connection’s marketing guru in 1997. Marks says he was inspired to hire the so-called bad boy of advertising after almost crashing his car on seeing a huge “Hello Boys” billboard featuring Eva Herzigova advertising Wonderbra.
It was Beattie who was behind French Connection’s transformative rebrand to FCUK. The marketing boss is said to have scribbled the logo down on a napkin after spotting a fax sent from the brand’s UK headquarters: It was headed “From: FCUK”.
The FCUK rebrand was a masterstroke at the time and played into the brash Nineties style. The retailer sold over one million £20
T-shirts emblazoned with slogans such as “FCUK like a bunny”. Middle Britain’s outrage about the rudeness became a huge endorsement for rebellious shoppers.
The cheeky slogans sent the company’s sales and shares soaring, taking French Connection to a value of £500m at one point. Last week it was valued at around £32.7m.
Saturation quickly set in as a roaring counterfeit trade compounded the growing problem of overexposure and FCUK fell out of fashion.
“Instead of being something everybody wanted to wear, we became what everybody didn’t want to wear. It took a long time to sort out”, Marks said in 2013. One could easily argue the company still hasn’t resolved its difficulties.
Unlike Burberry, which reinvented itself from when its checks were associated with chav culture to becoming highly sought-after by the front-row fashion crowd, French Conne
ction has always remained in the general public’s eye as FCUK.
Last year the retailer flirted with a brief resurrection of the brand in the hope that it could also cash in on a Nineties revival under which sportswear brands Fila, Champion and Ellesse have returned to popularity. Company sources say that the move was popular but many retail experts viewed it as a backwards step.
The company’s loss-making stores continue to burn through cash; at its half year last July its cash pile had shrunk from £15m in 2015 to £7m. Meanwhile, the retailer faces intense competition from online rivals Asos and fast-fashion European giants like Zara and H&M’s &OtherStories.
Marks has so far been steadfast in his refusal to leave the business. He has used his 42pc stake to exert his power, despite not holding a controlling position since selling shares in 2004 to finance his divorce to fashion journalist Alisa Green.
In order to survive, French Connection is now exploring the sale of more shops and its subsidiary Toast.
Marks has made tough decisions before. In 2010 he sold off the Nicole Farhi fashion brand he had started with his former partner, after failing to stem losses. Whether he can be that brutal with his own company is another question. “I think Marks is clinging on to finding his luck again, like he did with FCUK,” one senior retail source said. “But he needs so much more than luck, he needs to go.”