French Connection saw losses widen in the past six months compared with last year after suffering the effects of discounting, a fall in sterling and failures at retailers that stocked its clothing.

The company lost £12.8m ($21.1m) before tax in the six months to August, compared with a loss of £5.4m last year – a figure that excluded a £1.9m gain on the disposal of leased property.

The news sent the shares down 13 per cent to 50p, with investors taking little confidence in the promise of further store closures and other cost cuts from Stephen Marks, chairman and chief executive.

Mr Marks said: “I am disappointed with these results, but we are working to turn things round.”

The company is undertaking a review in which it will look at whether to retain some of its overseas businesses. It aims to achieve further savings by closing some stores and cutting back on advertising. Mr Marks would not comment on which stores would be closed or how many jobs would be cut. The group would join some other UK retailers in retreating from their overseas businesses.

French Connection went into the recession trying to reposition the brand as its FCUK brand began to wane.

Although it has stabilised parts of the business, with a 2 per cent growth in comparable sales from women’s wear in UK and Europe, most sections were weaker.

Revenues from global wholesale sales fell 16 per cent to £33.8m, with many of the smaller independent stores that sell French Connection clothing having failed. Overall revenues were up 4 per cent from £112.4m to £116.9m.

Profit margins were 1 percentage point lower across the group at 50.8 per cent, due to discounting.

The group’s North American business was disappointing, with like-for-like retail sales falling 3 per cent. Mr Marks said he saw “little hope of improvement in the short term”. The loss per share was 11.5p (3.1p), and there is no dividend.

FCUK’s popularity was as temporary as it was controversial, giving the company a headache even before the recession started. It has since fought a war on two fronts: trying to reposition the brand while cutting costs. With £13m-£15m of losses expected this year and little prospect of profitability in the next few years, its net cash is being eaten away. The fact the shares have any value at all shows the market has some confidence in Mr Marks’ turnround plans as well as an economic recovery that could drive French Connection back to profitability.