FRAN Francescas Holdings Corporation

The apparel and accessories retailer Francesca’s Holding Corp (FRAN) raised its guidance for the upcoming fourth quarter ending February 2, 2013. The upward revision came on the back of strong sales and margin performance in the holiday season.

The company raised its earnings per share guidance to the range of 29 cents to 30 cents from the previously announced range of 27 cents to 28 cents. Net sales for the fourth quarter are projected to be around $84.5 million to $85.0 million, up 37% to 38% over the comparable prior-year quarter. Net sales were guided up from the range of $82.5 million to $83.5 million announced during the third quarter conference call.

November same-store sales were above expectations despite the negative effects of Hurricane Sandy, and prompted the company to raise its guidance for the upcoming quarter.

The company’s boutiques saw customer traffic during the holiday season. Moreover, its ‘broad and shallow merchandising strategy’ was a big hit.

The Zacks Consensus Estimate for the fourth quarter of 2012 increased by one cent to 29 cents per share in the past 30 days, as 2 out of 5 estimates were raised. The current projection implies an estimated year-over-year growth of 54.7%.

Francesca's reported third-quarter earnings of 24 cents a share, beating the Zacks Consensus Estimate by a couple of cents or 9.1%. Earnings more than doubled from the prior-year quarter earnings of 11 cents. Net sales came in at $72 million, up 44% year over year and beat the Zacks Consensus Estimate of $71 million. Comparable boutique sales improved 16.7%.

Operating income jumped 120.4% to $17.7 million. Operating margin expanded 855 basis points to 24.6%, reflecting selling, general and administrative expense leverage, as well as gross margin improvement of 96 basis points to 52.6%.

The company’s stores are widespread across the U.S. enabling it to reach a large number of customers. It has also increased focus on e-commerce, which is expected to boost revenue in the near future.

Founded in 1999 and headquartered in Houston, Texas, Francesca’s Holdings Corporation operates a chain of retail boutiques under the Francesca’s collections brand in the United States. It is a holding company operating through its subsidiary, Francesca’s Collections Inc.

The company targets female customers and offers a diverse and uniquely balanced mix of high-quality, trendy apparel, jewelry, accessories and gifts at attractive prices. Francesca’s Holdings carries a Zacks Rank #1 (Strong Buy) and competes with Urban Outfitters Inc. (URBN) carrying a Zacks Rank #3 (Hold) and ANN Inc. (ANN) carrying a Zacks Rank #2 (Buy).

 
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