LONDON, May 19 (Reuters) - British fashion group French Connection (FCCN.L) said first-quarter trading was slightly ahead of plan, with a fall in sales offset by margin gains.

Photo: www.frenchconnection.com

"The UK fashion retail market appears to have been resilient in recent months but there is no certainty this will continue through the rest of the year and we are planning accordingly," the firm said on Wednesday 19 May.

French connection said sales at UK and Europe stores open over a year fell 1.9 percent in the 14 weeks to May 15 but gross margins improved as there was less discounting.

"Mens' wear achieved encouraging growth in the period, showing the early signs of recovery in that division. Ladies' wear revenue was a little lower on a strong comparable performance," the firm said.

In North America like-for-like sales in stores that are being retained were down 2.5 percent, with gross margins "well ahead" of the previous year.

The firm's wholesale business saw deliveries increase during the period, while forward orders for autumn/winter are also higher.

French Connection has suffered in recent years as it struggled to reposition itself after the popularity of its FCUK brand waned, even before the recession started.

In March the firm completed a restructuring aimed at returning it to profitability by selling its loss-making Nicole Farhi brand and closing most of its U.S. stores. It had previously exited businesses in Japan and Northern Europe.

Shares in French Connection, which have lost 38 percent of their value over the last year, were down 2.4 percent at 41 pence at 1113 GMT, valuing the business at about 39 million pounds.

The shares were changing hands for over 200 pence two years ago. ($1=.6918 Pound) (Reporting by James Davey, editing by Simon Jessop)