UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE
ACT OF 1934
Date of Report (Date of earliest event reported):
December 9, 2015
FRANCESCA’S HOLDINGS CORPORATION
(Exact Name of Registrant as Specified in
Its Charter)
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Delaware |
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001-35239 |
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(State or Other Jurisdiction of Incorporation) |
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20-8874704 |
(Commission File Number) |
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(I.R.S. Employer Identification No.) |
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8760 Clay Road,
Houston, Texas |
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77080 |
(Address of Principal Executive Offices) |
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(Zip Code) |
(713) 864-1358
(Registrant’s Telephone Number, Including
Area Code)
(Former Name or Former Address, if Changed
Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c)
under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial
Condition.
On December 9, 2015,
Francesca’s Holdings Corporation (the “Company”) issued a press release announcing its consolidated financial
results for the fiscal third quarter ended October 31, 2015. A copy of the press release is furnished as Exhibit 99.1 to this report.
This information shall not be deemed “filed” for purposes of Section 18 of the Exchange Act of 1934, as amended, and
is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any
general incorporation language in such filing.
Item 9.01. Financial
Statements and Exhibits.
| 99.1 | Press Release issued by Francesca’s Holdings Corporation
on December 9, 2015. |
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
|
FRANCESCA’S HOLDINGS CORPORATION |
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Date: December 9, 2015 |
By: |
/s/ Kal Malik |
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Kal Malik |
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Chief Administrative Officer |
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EXHIBIT
INDEX
Exhibit No. |
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Description
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99.1 |
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Press Release issued by Francesca’s Holdings Corporation on December 9, 2015. |
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Exhibit 99.1
![](http://www.sec.gov/Archives/edgar/data/1399935/000114420415070100/image_001.jpg)
francesca’s® Reports Third Quarter Fiscal Year
2015 Financial Results
| · | Net sales increased 19% to $103.7 million |
| · | Comparable sales increased 4% |
| · | Diluted earnings per share was $0.16 |
| · | Opened 80 boutiques year-to-date |
HOUSTON, TEXAS — December 9, 2015 — Francesca’s
Holdings Corporation (NASDAQ: FRAN) today reported financial results for the third quarter ended October 31, 2015.
Michael W. Barnes, Chairman, President, and CEO stated, “We
are very pleased to have exceeded our third quarter sales and earnings expectations. The momentum in our business that began in
August continued throughout the third quarter. We saw strength across all of our departments and throughout many categories, with
apparel and accessories businesses leading the way. The sales productivity of new boutiques were the highest since 2012, which
we believe is a result of the improved merchandise offering and elevated boutique level execution. In anticipation of an earlier
start of the holiday season, we accelerated inventory receipts into the third quarter compared to last year. However, we are planning
inventory levels at the end of the fourth quarter to be more consistent with historical levels in line with our expectations.”
Mr. Barnes noted that, “Based on recent results and our
strong merchandising position across our apparel, jewelry and gift businesses, we have increased sales and comparable sales guidance
for the fiscal year. We have increased the lower end of our EPS guidance for the fiscal year which now includes approximately $0.04
per diluted share for team member bonuses that were not included in our prior guidance. Overall, we continue to focus our execution
on building the senior management team and executing our long term strategy toward achieving our future goals. Now that both our
new Chief Merchandising Officer and our SVP of Digital and Marketing have joined the leadership team, I look forward to their contributions
as we implement and execute our long term strategies which I call the “Vision 2020” plan. Thus far during fiscal 2015,
we have driven meaningful improvement in our financial performance and I continue to believe in the significant long term growth
opportunities ahead. I’d like to thank all our team members for their hard work and continued dedication to francesca’s®.”
THIRD QUARTER RESULTS
Net sales increased 19% to $103.7 million from $87.1 million
in the comparable prior year period. This increase was driven by the 4% increase in comparable sales as well as the opening of
81 new boutiques since the comparable prior year quarter. We opened 11 boutiques during the quarter bringing our total boutique
count to 619 at the end of the third quarter.
The increase in comparable sales was primarily driven by an
increase in average transaction value compared to prior year. Each of our merchandise category posted double digit sales increase
during the quarter, with strongest growth in apparel and accessories. DTC sales increased 12% to $3.8 million during the quarter
compared to $3.4 million in the same period last year.
Gross profit, as a percentage of net sales, decreased to 46.6%
compared to 47.3% in the prior year quarter. This decrease is driven by 30 basis points of lower merchandise margin due to charges
related to the disposal of slow-moving merchandise and 30 basis points of increased depreciation charges associated with remodeling
and updating existing boutiques equipment, furniture and fixtures as well as increasing boutique build-out costs.
Selling, general and administrative expenses (“SG&A”)
increased 25% to $37.3 million compared to $29.8 million in the prior year quarter. The increase in SG&A expenses is primarily
due to higher boutique and corporate payroll to support the larger boutique base as well as increased performance-based incentive
bonus expenses.
Income from operations was $11.0 million, or 10.7% of net sales,
compared to $11.4 million, or 13.1% of net sales, in the prior year quarter.
BALANCE SHEET SUMMARY
Total cash and cash equivalents at the end of the quarter were
$42.0 million compared to $22.8 million at the end of the comparable prior year quarter.
We ended the quarter with $43.9 million of inventory compared
to $35.4 million at end of the comparable prior year period. Average ending inventory per boutique increased 8% compared to prior
year period due to accelerated inventory receipts in preparation for the holiday season.
During the third quarter, the Company repurchased 666,000 shares
of its common stock at a cost of $8.5 million or an average of $12.83 per share.
FOURTH QUARTER AND FISCAL YEAR 2015 GUIDANCE
For the fourth quarter ending January 30, 2016, net sales are
expected to be in the range of $127.0 million to $130.0 million; assuming a mid-single digit increase in comparable sales compared
to the prior year comparable sales increase of 1%. The Company expects to finish the year with 616 boutiques as a result of opening
3 new boutiques and closing 6 boutiques in the fourth quarter. Diluted earnings per share are expected to be in the range of $0.31
to $0.33.
For the full year ending January 30, 2016, we expect net sales
to be in the range of $432.0 million and $435.0 million; assuming a flat to slightly positive comparable sales compared to a prior
year comparable sales decrease of 5%. The Company expects to open 83 boutiques in fiscal year 2015 compared to 88 new boutiques
opened in fiscal year 2014. Diluted earnings per share are expected to be in the range of $0.86 to $0.88. The number of average
diluted shares for the full year assumed in guidance is expected to be 42.1 million shares. The effective tax rate is estimated
to be 38.1%. We expect capital expenditures of $25.0 million to $26.0 million for fiscal year 2015.
Conference Call Information
A conference call to discuss the
third quarter fiscal year 2015 results is scheduled for December 9, 2015, at 8:30 a.m. ET. A live web cast of the conference call
will be available in the investor relations section of our website, www.francescas.com. A replay of the webcast will also
be available shortly after the conclusion of the call and will remain on the website for ninety days. A replay of the call will
be available shortly after the conclusion of the call and remain until December 16, 2015. To access the telephone replay, listeners
should dial 1-877-870-5176. The access code for the replay is 5941907.
Forward-Looking Statements
Certain statements in this release are "forward-looking
statements" made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended.
Such forward-looking statements reflect our current expectations or beliefs concerning future events and are subject to various
risks and uncertainties that may cause actual results to differ materially from those that we expected. These risks and uncertainties
include, but are not limited to, the following: the risk that we cannot anticipate, identify and respond quickly to changing fashion
trends and customer preferences; our ability to attract a sufficient number of customers to our boutiques or sell sufficient quantities
of our merchandise through our direct-to-consumer business; our ability to successfully open and operate new boutiques each year;
our ability to efficiently source and distribute additional merchandise quantities necessary to support our growth and; our ability
to attract and integrate a new Chief Financial Officer. For additional information regarding these and other risks and uncertainties
that could cause actual results to differ materially from those contained in our forward-looking statements, please refer to "Risk
Factors" in our Annual Report on Form 10-K for the year ended January 31, 2015 filed with the Securities and Exchange Commission
on March 27, 2015 and any risk factors contained in subsequent quarterly and annual reports we file with the SEC. We undertake
no obligation to publicly update or revise any forward-looking statement.
About Francesca's Holdings Corporation
francesca's® is a growing specialty retailer which operates
a nationwide-chain of boutiques providing customers a unique, fun and differentiated shopping experience. The merchandise assortment
is a diverse and balanced mix of apparel, jewelry, accessories and gifts. Today francesca's® operates 621 boutiques in 47 states
and the District of Columbia and also serves its customers through francescas.com. For additional information on francesca's®,
please visit www.francescas.com.
CONTACT:
ICR, Inc. |
Company |
Jean Fontana |
Kate Venturina |
646-277-1214 |
832-494-2233 |
|
kate.venturina@francescas.com / IR@francescas.com |
Francesca’s Holdings Corporation
Consolidated Statements of Operations
(In Thousands, Except Per Share Amounts and Percentages)
| |
Thirteen Weeks Ended | | |
| | |
| | |
| |
| |
October 31, 2015 | | |
November 1, 2014 | | |
Variance | |
| |
In USD | | |
As a % of Net Sales(1) | | |
In USD | | |
As a % of Net Sales(1) | | |
In USD | | |
% | | |
Basis Points | |
Net sales | |
$ | 103,728 | | |
| 100.0 | % | |
$ | 87,110 | | |
| 100.0 | % | |
$ | 16,618 | | |
| 19 | % | |
| - | |
Cost of goods sold and occupancy costs | |
| 55,362 | | |
| 53.4 | % | |
| 45,925 | | |
| 52.7 | % | |
| 9,437 | | |
| 21 | % | |
| 70 | |
Gross profit | |
| 48,366 | | |
| 46.6 | % | |
| 41,185 | | |
| 47.3 | % | |
| 7,181 | | |
| 17 | % | |
| (70 | ) |
Selling, general and administrative expenses | |
| 37,286 | | |
| 35.9 | % | |
| 29,810 | | |
| 34.2 | % | |
| 7,476 | | |
| 25 | % | |
| 170 | |
Income from operations | |
| 11,080 | | |
| 10.7 | % | |
| 11,375 | | |
| 13.1 | % | |
| (295 | ) | |
| (3 | )% | |
| (240 | ) |
Interest expense | |
| (122 | ) | |
| (0.1 | )% | |
| (117 | ) | |
| (0.1 | )% | |
| (5 | ) | |
| 4 | % | |
| - | |
Other (expense) income | |
| 29 | | |
| 0.0 | % | |
| 42 | | |
| 0.0 | % | |
| (13 | ) | |
| (31 | )% | |
| - | |
Income before income tax expense | |
| 10,987 | | |
| 10.6 | % | |
| 11,300 | | |
| 13.0 | % | |
| (313 | ) | |
| (5 | )% | |
| (240 | ) |
Income tax expense | |
| 4,036 | | |
| 3.9 | % | |
| 4,030 | | |
| 4.6 | % | |
| 6 | | |
| 0 | % | |
| (70 | ) |
Net income | |
$ | 6,951 | | |
| 6.7 | % | |
$ | 7,270 | | |
| 8.3 | % | |
$ | (319 | ) | |
| (4 | )% | |
| (160 | ) |
(1) Percentage
totals or differences in the above table may not equal the sum or difference of the components due to rounding. | | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Diluted earnings per share | |
$ | 0.16 | | |
| | | |
$ | 0.17 | | |
| | | |
| | | |
| | | |
| | |
Weighted average diluted share count | |
| 42,246 | | |
| | | |
| 42,389 | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Comparable sales change | |
| 4% | | |
| (6)% | | |
| | | |
| | | |
| | |
| |
Thirty Nine Weeks Ended | | |
| | |
| | |
| |
| |
October 31, 2015 | | |
November 1, 2014 | | |
Variance | |
| |
In USD | | |
As a % of Net Sales | | |
In USD | | |
As a % of Net Sales | | |
In USD | | |
% | | |
Basis Points | |
Net sales | |
$ | 304,772 | | |
| 100.0 | % | |
$ | 269,853 | | |
| 100.0 | % | |
$ | 34,919 | | |
| 13 | % | |
| - | |
Cost of goods sold and occupancy costs | |
| 161,205 | | |
| 52.9 | % | |
| 141,521 | | |
| 52.4 | % | |
| 19,684 | | |
| 14 | % | |
| 50 | |
Gross profit | |
| 143,567 | | |
| 47.1 | % | |
| 128,332 | | |
| 47.6 | % | |
| 15,235 | | |
| 12 | % | |
| (50 | ) |
Selling, general and administrative expenses | |
| 105,422 | | |
| 34.6 | % | |
| 86,275 | | |
| 32.0 | % | |
| 19,147 | | |
| 22 | % | |
| 260 | |
Income from operations | |
| 38,145 | | |
| 12.5 | % | |
| 42,057 | | |
| 15.6 | % | |
| (3,912 | ) | |
| (9 | )% | |
| (310 | ) |
Interest expense | |
| (344 | ) | |
| (0.1 | )% | |
| (507 | ) | |
| (0.2 | )% | |
| 163 | | |
| (32 | )% | |
| 10 | |
Other income | |
| (91 | ) | |
| 0.0 | % | |
| 201 | | |
| 0.1 | % | |
| (292 | ) | |
| (145 | )% | |
| (10 | ) |
Income before income tax expense | |
| 37,710 | | |
| 12.4 | % | |
| 41,751 | | |
| 15.5 | % | |
| (4,041 | ) | |
| (10 | )% | |
| (310 | ) |
Income tax expense | |
| 14,214 | | |
| 4.7 | % | |
| 15,614 | | |
| 5.8 | % | |
| (1,400 | ) | |
| (9 | )% | |
| (110 | ) |
Net income | |
$ | 23,496 | | |
| 7.7 | % | |
$ | 26,137 | | |
| 9.7 | % | |
$ | (2,641 | ) | |
| (10 | )% | |
| (200 | ) |
(1) Percentage
totals or differences in the above table may not equal the sum or difference of the components due to rounding. | | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Diluted earnings per share | |
$ | 0.55 | | |
| | | |
$ | 0.62 | | |
| | | |
| | | |
| | | |
| | |
Weighted average diluted share count | |
| 42,365 | | |
| | | |
| 42,373 | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Comparable sales change | |
| (1)% | | |
| (7)% | | |
| | | |
| | | |
| | |
Francesca’s Holdings Corporation
Consolidated Balance Sheets
(In thousands, except share amounts)
| |
October 31, 2015 | | |
January 31, 2015 | | |
November 1, 2014 | |
ASSETS | |
| | |
| | |
| |
Current assets: | |
| | | |
| | | |
| | |
Cash and cash equivalents | |
$ | 42,015 | | |
$ | 39,071 | | |
$ | 22,830 | |
Accounts receivable | |
| 8,683 | | |
| 12,279 | | |
| 9,214 | |
Inventories | |
| 43,885 | | |
| 23,801 | | |
| 35,428 | |
Deferred income taxes | |
| 5,737 | | |
| 4,858 | | |
| 4,797 | |
Prepaid expenses and other current assets | |
| 6,023 | | |
| 5,890 | | |
| 5,699 | |
Total current assets | |
| 106,343 | | |
| 85,899 | | |
| 77,968 | |
Property and equipment, net | |
| 79,017 | | |
| 74,095 | | |
| 70,646 | |
Deferred income taxes | |
| 6,659 | | |
| 3,642 | | |
| 6,573 | |
Other assets, net | |
| 1,656 | | |
| 1,909 | | |
| 2,776 | |
TOTAL ASSETS | |
$ | 193,675 | | |
$ | 165,545 | | |
$ | 157,963 | |
| |
| | | |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | |
| | | |
| | | |
| | |
Current liabilities: | |
| | | |
| | | |
| | |
Accounts payable | |
$ | 15,933 | | |
$ | 11,550 | | |
$ | 13,074 | |
Accrued liabilities | |
| 14,817 | | |
| 11,904 | | |
| 8,610 | |
Total current liabilities | |
| 30,750 | | |
| 23,454 | | |
| 21,684 | |
Landlord incentives and deferred rent | |
| 37,540 | | |
| 32,877 | | |
| 33,299 | |
Total liabilities | |
| 68,290 | | |
| 56,331 | | |
| 54,983 | |
| |
| | | |
| | | |
| | |
Commitments and contingencies | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | |
Stockholders’ equity: | |
| | | |
| | | |
| | |
Common stock - $.01 par value, 80.0 million shares authorized; 45.5 million shares issued at each October 31, 2015, January 31, 2015 and November 1, 2014, respectively. | |
| 455 | | |
| 455 | | |
| 455 | |
Additional paid-in capital | |
| 106,722 | | |
| 105,498 | | |
| 105,235 | |
Retained earnings | |
| 86,900 | | |
| 63,404 | | |
| 57,433 | |
Treasury stock, at cost – 3.8 million, 3.2 million and 3.2 million shares held at October 31, 2015, January 31, 2015 and November 1, 2014, respectively. | |
| (68,692 | ) | |
| (60,143 | ) | |
| (60,143 | ) |
Total stockholders’ equity | |
| 125,385 | | |
| 109,214 | | |
| 102,980 | |
| |
| | | |
| | | |
| | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | |
$ | 193,675 | | |
$ | 165,545 | | |
$ | 157,963 | |
Francesca’s Holdings Corporation
Consolidated Statements of Cash Flows
(In thousands)
| |
Thirty Nine Weeks Ended | |
| |
October 31, 2015 | | |
November 1, 2014 | |
Cash Flows Provided By Operating Activities: | |
| | | |
| | |
Net income | |
$ | 23,496 | | |
$ | 26,137 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |
| | | |
| | |
Depreciation and amortization | |
| 12,361 | | |
| 9,848 | |
Stock-based compensation expense | |
| 2,416 | | |
| 2,488 | |
Excess tax benefit from stock-based compensation | |
| (81 | ) | |
| (226 | ) |
Loss on sale of assets | |
| 360 | | |
| 191 | |
Deferred income taxes | |
| (5,374 | ) | |
| (4,470 | ) |
Changes in operating assets and liabilities: | |
| | | |
| | |
Accounts receivable | |
| 3,677 | | |
| (4 | ) |
Inventories | |
| (20,084 | ) | |
| (10,814 | ) |
Prepaid expenses and other assets | |
| (66 | ) | |
| (240 | ) |
Accounts payable | |
| 6,086 | | |
| 3,268 | |
Accrued liabilities | |
| 2,913 | | |
| (1,213 | ) |
Landlord incentive and deferred rent | |
| 4,663 | | |
| 5,851 | |
Net cash provided by operating activities | |
| 30,367 | | |
| 30,816 | |
| |
| | | |
| | |
Cash Flows Used in Investing Activities: | |
| | | |
| | |
Purchase of property and equipment | |
| (19,850 | ) | |
| (16,785 | ) |
Proceeds from sale of assets | |
| 12 | | |
| 13 | |
Net cash used in investing activities | |
| (19,838 | ) | |
| (16,772 | ) |
| |
| | | |
| | |
Cash Flows Used in Financing Activities: | |
| | | |
| | |
Repurchases of common stock | |
| (7,872 | ) | |
| (5,270 | ) |
Proceeds from the exercise of stock options | |
| 206 | | |
| 1,332 | |
Excess tax benefit from stock-based compensation | |
| 81 | | |
| 226 | |
Repayments of borrowings under the revolving credit facility | |
| - | | |
| (25,000 | ) |
Net cash used in financing activities | |
| (7,585 | ) | |
| (28,712 | ) |
| |
| | | |
| | |
Net increase (decrease) in cash and cash equivalents | |
| 2,944 | | |
| (14,668 | ) |
Cash and cash equivalents, beginning of year | |
| 39,071 | | |
| 37,498 | |
Cash and cash equivalents, end of period | |
$ | 42,015 | | |
$ | 22,830 | |
| |
| | | |
| | |
Supplemental Disclosures of Cash Flow Information: | |
| | | |
| | |
Cash paid for income taxes | |
$ | 14,909 | | |
$ | 17,716 | |
Interest paid | |
$ | 142 | | |
$ | 340 | |
Francesca’s Holdings Corporation
Supplemental Information
Quarterly Sales by Merchandise Category
| |
Thirteen Weeks Ended | | |
Change | |
| |
October 31, 2015 | | |
November 1, 2014 | | |
Dollar | | |
% | |
| |
(in thousands, except percentages) | |
Apparel | |
$ | 54,326 | | |
$ | 44,274 | | |
$ | 10,052 | | |
| 23 | % |
Jewelry | |
| 21,265 | | |
| 18,638 | | |
| 2,627 | | |
| 14 | % |
Accessories | |
| 17,078 | | |
| 14,220 | | |
| 2,858 | | |
| 20 | % |
Gifts | |
| 10,847 | | |
| 9,606 | | |
| 1,241 | | |
| 13 | % |
Merchandise sales | |
| 103,516 | | |
| 86,738 | | |
| 16,778 | | |
| 19 | % |
Others(1) | |
| 212 | | |
| 372 | | |
| (160 | ) | |
| (43 | )% |
| |
$ | 103,728 | | |
$ | 87,110 | | |
$ | 16,618 | | |
| 19 | % |
| (1) | Includes gift card breakage income, shipping and change
in return reserve. |
Quarterly Comparable Transactions Results for Fiscal Year
2015
| |
Transactions(1) | | |
Average Transaction Value(2) | |
| |
| | |
| |
Q1 | |
| (5 | )% | |
| 3 | % |
Q2 | |
| (3 | )% | |
| (1 | )% |
Q3 | |
| (1 | )% | |
| 5 | % |
| (1) | The number of comparable transactions (including merchandise
and gift card purchases, returns and gift card redemptions) processed through our point-of-sale system for which a receipt was
issued. |
| (2) | Average transaction value is calculated by dividing
total comparable sales by the number of comparable transactions during the period. |
Quarterly Comparable Sales
| |
FY 2013 | | |
FY 2014 | | |
FY 2015 | |
Q1 | |
| 2 | % | |
| (7 | )% | |
| (2 | )% |
Q2 | |
| (1 | )% | |
| (7 | )% | |
| (4 | )% |
Q3 | |
| (3 | )% | |
| (6 | )% | |
| 4 | % |
Q4 | |
| (6 | )% | |
| 1 | % | |
| | |
Fiscal year | |
| (2 | )% | |
| (5 | )% | |
| | |
Francescas (NASDAQ:FRAN)
Historical Stock Chart
From Jun 2024 to Jul 2024
Francescas (NASDAQ:FRAN)
Historical Stock Chart
From Jul 2023 to Jul 2024