francesca’s® Provides Fourth Quarter Fiscal Year 2017 Update and Introduces Fiscal Year 2018 Estimated Tax Rate and Bouti...
February 27 2018 - 4:18PM
Francesca’s Holdings Corporation (Nasdaq:FRAN) today announced that
the Company has reaffirmed sales guidance and updated EPS guidance
for the fourth quarter ending February 3, 2018. The Company
now expects fourth quarter 2017 net sales of $138.5 million and a
comparable sales decline of 15%, both at the high end of guidance.
The guidance ranges, noted in the Company’s January 4, 2018 press
release, were net sales of $137 million to $139 million with a
comparable sales decline of 15% to 17%.
As noted in the January 4, 2018 press release, the Tax Cuts and
Jobs Act prompted a non-cash write-down of the Company’s deferred
tax asset in the fourth quarter 2017. This is anticipated to
increase tax expense by approximately $3 million to $4 million, or
approximately $0.08 to $0.11 per diluted share. As a result, fourth
quarter 2017 GAAP diluted earnings per share is expected to be in
the range of $0.07 to $0.11. Excluding the write-down of the
deferred tax asset and related tax expense increase, adjusted
diluted earnings per share is now estimated to be $0.18 to
$0.19. This is at the low end of the prior guidance of $0.18
to $0.23 as the Company continued to take actions to address
slow-selling merchandise.
Fiscal year 2017 GAAP diluted earnings per share is expected to
be in the range of $0.39 to $0.43. Excluding the write-down
of the deferred tax asset and related tax expense increase,
adjusted diluted earnings per share is now estimated to be $0.50 to
$0.51. This compares with prior adjusted earnings per share
guidance of $0.50 to $0.55.
For fiscal 2018, the Company expects the effective tax rate to
decrease to approximately 26% based on the new tax legislation.
The Company’s priorities in fiscal 2018 are to drive improved
comparable sales performance through improved merchandising, while
continuing to make strategic investments for the future that will
drive long term sustainable growth and shareholder value.
While new boutiques produce favorable financial returns, the
Company believes it is prudent to moderate boutique openings in
2018 as it focuses on improving merchandising and investing in
existing boutiques and infrastructure. The Company expects to open
approximately 35 new boutiques in high traffic locations while also
refreshing approximately 80 to 90 high volume existing boutiques.
Additionally, the Company has increased performance expectations of
existing boutiques and, as a result, will close approximately 20
boutiques.
The Company will remain vigilant on expenses and capital
management to ensure it continues to invest in future growth. The
Company plans to continue to allocate cash within its stated
capital allocation framework. The priorities for excess cash
are boutique and ecommerce investments, infrastructure investments
and share repurchases.
Steve Lawrence, President and Chief Executive Officer, stated,
“Our primary focus in fiscal 2018 will be to continue aligning our
merchandise assortments with our core guest and execute the
strategic initiatives we have previously communicated. We
believe this will stabilize our business, drive improved financial
performance and enable us to enhance shareholder value.” Mr.
Lawrence added, “In fiscal 2017, we made significant investments in
our infrastructure to develop a stronger foundation for our
future. We will continue to enhance those investments and we
expect to see the benefit of these investments take hold in fiscal
2018 and beyond. We look forward to sharing more details
around our plans for 2018 on our next earnings call.”
Earnings Conference Call
francesca’s® plans to release fiscal fourth quarter 2017
financial results on March 27, 2018. The company will host a
conference call on that day at 8:30 a.m. ET to discuss fourth
quarter 2017 results.
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 or changes in
consumer environment, including changing expectations of service
and experience in boutiques and online, and evolve our business
model; our ability to attract a sufficient number of customers to
our boutiques or sell sufficient quantities of our merchandise
through our ecommerce business; our ability to successfully open
and operate new boutiques each year and our ability to efficiently
source and distribute additional merchandise quantities necessary
to support our growth; new developments such as tax legislation
that may influence the effective tax rate and financial
outlook. 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 28, 2017 filed with the Securities and
Exchange Commission on March 22, 2017 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.
The Company may not issue future press releases discussing
guidance or financial results such as this one other than
associated with routine quarterly and annual financial
reporting.
Preliminary Results
The Company's announced preliminary results for its fourth
quarter and fiscal year ended February 3, 2018 are
preliminary and may change. The Company and its auditors have not
completed their normal closing and audit procedures for the quarter
and fiscal year ended February 3, 2018. There can be no
assurance that final results for the quarter and full year will not
differ from the preliminary results, including as a result of
closing procedures or audit adjustments. In addition, these
preliminary results should not be viewed as a substitute for full
financial statements prepared in accordance with GAAP that have
been audited by the Company's auditors.
SEC Regulation G – Non-GAAP Information
This press release included non-GAAP adjusted earnings per
share, a non-GAAP financial measure. The Company believes
this non-GAAP financial measure not only provides our management
with comparable financial data for internal financial analysis but
also provides meaningful supplemental information to
investors. Specifically, this non-GAAP financial measure
allows investors to better understand the performance of the
business and facilitates a meaningful evaluation of our quarterly
and fiscal year 2017 diluted earnings per share on a comparable
basis with our quarterly and fiscal year 2016 results. This
non-GAAP measure should be considered a supplement to, and not as a
substitute for or superior to, financial measures calculated in
accordance with GAAP.
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
personalized shopping experience. The merchandise assortment
is a diverse and balanced mix of apparel, jewelry, accessories and
gifts. Today, francesca's® operates approximately 721
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.Jean Fontana646-277-1214
Company Kelly Dilts 832-494-2236 Kate Venturina
832-494-2233IR@francescas.com
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