UK fashion retailer French Connection has said it is still looking for opportunities to expand in the US despite "challenging conditions" there.

The comments came as the retailer unveiled a 21% increase in pre-tax profits for last year to �23.2m.

The company said it had enjoyed "a very strong year" in both the UK and the rest of Europe, and sales in this region were continuing to grow strongly.

French Connection, which has become well known for its controversial "fcuk" logo, added that a new advertising campaign would be launched in May.

Slowly does it

Sales in the UK have maintained their strength in 2002, rising 5% in the first four weeks of the current financial year.

The buoyant sales in the UK and Europe have managed to offset a big drop in trade at its US stores, following the events of 11 September.

Sales at US stores open at least 12 months fell by 11.7% last year, and the four stores in Manhattan in New York suffered particularly badly with sales down more than 30%.

Despite the problems, French Connection said it had seen a "slow but steady" improvement in conditions from Christmas, and it was still looking to expand.

"The difficulties in the US market are seen by us as an opportunity to acquire interesting retail sites at sensible prices," said chairman and chief executive Stephen Marks.

New campaign

Outside the US, French Connection's strong brand recognition was cited as a major factor behind the group's healthy sales.

The controversial "fcuk" logo has been widely credited with turning the company's fortunes around since it was introduced.

The company said a new television advertising campaign would be launched in May this year.

It gave few clues to its content, but said "we aim to surprise and excite all of our customers with our marketing".