French Connection founder Stephen Marks said the fashion chain was on the "right path" after it narrowed annual losses and stemmed a sales decline.

Mr Marks said it had been buoyed by the impact of a new design team, while its online business has grown and underperforming stores closed.

The group swung to a profit of £1.7 million for the second half, leaving underlying losses for the 12 months to January 31 at £4.4 million.

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Mr Marks said it was an "encouraging improvement" from the £7.2 million losses recorded the year before.

Like-for-like sales in the second half in the UK and Europe were up 1.4%, after a 4.5% decline in the first six-month period. It meant there was an overall decline of 1.4%, a sharp improvement on the 7% drop in the previous year.

Mr Marks, who is chief executive and chairman, said: "I am pleased that the initiatives we put in place to drive a turnaround in our trading performance have delivered better than anticipated results and that they continue to gain traction.

"We have accomplished a lot in the past year and will build on that momentum to deliver further improvements.

"We have seen a positive reception to our Spring range and whilst there is still much to do, I am confident that we are on the right path and have the right strategy to drive further progress."

Better performance in the UK and Europe narrowed losses in the region but tough trading conditions in North America hit profits across the Atlantic. French Connection's e-commerce business grew 8% over the year.

Overall revenues of £189.4 million were 4% lower due to a reduced number of stores.

Nine were shut during the year and the company plans to shut three-to-five in the current 12-month period.

Mr Marks said wholesale orders for Spring 2014 collections were ahead of last year.

French Connection has 65 stores in the UK and Europe as well as licensed and wholesale operations around the world including Hong Kong and China.

Numis analyst Andrew Wade said the retailer was turning a corner and looked set to continue to benefit from operational improvements, adding: "We remain confident in the global appeal of the brand."