* H1 pretax loss widens to 12.8 million sterling from 5.4 million sterling
* Profit margin falls 1 percent to 50.8 percent
* Closes North European business
(Adds further details)
By Rhys Jones
LONDON, Sept 17 (Reuters) - British fashion group French Connection said it would close more underperforming stores after it shut down its North European retail business and cut staff in the first half to stem widening losses.
The company said it continued to be "severely affected by difficult retail environments" and would "close stores which do not make an appropriate contribution", following the closure of nine stores and concessions in the first half.
The group, which controversially began branding its clothes 'fcuk' in 1997, on Thursday reported a pretax loss of 12.8 million pounds ($21.06 million) on revenue 4 percent higher at 116.9 million pounds for the six months to the end of July.
The retailer and wholesaler said like-for-like sales in its UK/Europe retail division, which accounts for over half its turnover, rose 2 percent during the period with its core gross profit margin falling to 50.8 percent from 51.8 percent a year ago, primarily due to the weakness of sterling.
Like-for-like sales in North America, accounting for some 16 percent of turnover, were down 3 percent and margins were 6.5 percent lower due to increased promotions.
French Connection, which also owns designer label Nicole Farhi and the TOAST, YMC and Scorah Pattullo brands, also said wholesale orders in both regions were down.
"There is little evidence that the fashion retail market in UK/Europe will recover in the short term and we will continue to operate cautiously in relation to managing inventory and reducing overheads where possible," the company said.
French Connection's share price has risen 12 percent so far this year, underperforming the FTSE All Share General Retailers Index by 30 percent.
The stock closed at 57.50 pence on Wednesday, valuing the group at around 55 million pounds.
There have been hopes of a quick recovery from recession, backed up by official data and surveys on consumer morale and house prices.
But the picture was clouded by the British Retail Consortium on Tuesday when it said retail sales fell in August for the first time since May and some analysts remain cautious given rising unemployment, low earnings growth and heightened debt levels. ($1=.6079 pounds) (Editing by Greg Mahlich)