The founder of French Connection said yesterday that the group's performance was “not good enough” as profits at the fashion retailer plunged and it became the latest to write off the prospects of a revival on the high street this year.

Stephen Marks, who set up French Connection in 1972 and is the company's chairman and chief executive, reported a 22.5 per cent plunge in pre-tax profits to £3.1 million for the year to February. Sales across the business slipped 2 per cent to £236.1 million, with menswear sales down 11 per cent in the UK.

A year ago, Mr Marks said that French Connection was beginning to turn the corner after falling out of favour with British shoppers. Yesterday, however, he said: “This performance is clearly not good enough. When French Connection was hot, it was fantastic. We just have to get it hot again.”

French Connection has restructured its menswear design and merchandising teams and Mr Marks said that all other elements of the business would be reviewed. He insisted that there were signs of improvement, with wholesale orders to department stores for the spring and summer collection up by 5 per cent in the UK and 10 per cent in dollar terms in the United States.

However, he told investors that like-for-like growth was unlikely across French Connection's own high street stores in Britain in the coming year. He said: “There are signs of a recovery in the last few weeks, in areas like men's suiting, and we could make some inroads in the second half of the year, but I can never remember trading conditions being as difficult as they are now.

“I wish we could wave a magic wand over this, but we can't.

“You've got the internet taking £18 billion-worth of sales away from the retail sector and there's a lot of really good competition. It's extremely difficult.”

French Connection, perhaps best-known for its FCUK marketing campaign in the late 1990s, relaunched its online store this week. It intends to deliver to customers around the world. Mr Marks said he believed that the internet could account for 10 per cent of group revenue - £24 million - in the future. It generated £3 million last year.

Shares in French Connection have tumbled nearly 70 per cent in the past ten months. The group was one of the first to issue a profit warning in the run-up to Christmas. Nevertheless, with the fall in profits widely expected, shares rallied to close up 5p at 85p yesterday. The full-year dividend was held at 5p per share, allowing Mr Marks to earn £2 million from his stake in the company.

Analysts downgraded their expectations for the coming year. John Stevenson, at Shore Capital, cut its 2009 pre-tax profit forecast from £6.6 million to £5.4 million. He said: “There is little downside left in the share price, assuming the UK does not slip into an Armageddon scenario. That said, with most clothing data over the coming three months likely to remain suitably awful, there are much stronger retail stories to focus on.”

Sanjay Vidyarthi, an analyst at Dresdner Kleinwort, said: “The focus is on the outlook and there is little to be cheerful about.”

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