French Connection sells Nicole Farhi

It will also close around 17 U.S. stores at a cost of about 6.5 million pounds, cutting its retail presence in that country to about six stores.

"We have had to make some tough decisions, but (...they leave) us with a continuing business that we expect will be both profitable and cash generative even in the current difficult economic environment," Marks said.

Like-for-like sales at UK and European businesses that are being retained rose 2.8 percent in the year ended January 31.

Williams said trading since the year-end had "continued in a similar manner with a small improvement in menswear."

The firm added that forward orders for its UK and European wholesale business for winter 2010 had risen.

The group, which ended the year with net cash of 36 million pounds, cut the full-year dividend to 0.5 pence a share from 1.7 pence the year before. This will cost about 0.5 million pounds.

(Reporting by James Davey and Mark Potter; Editing by Mike Nesbit)