Francesca’s Holdings Corporation (Nasdaq:FRAN) today reported
financial results for the first quarter ended May 5, 2018.
Steve Lawrence, President and CEO, stated, “First quarter
results were generally in line with our expectations and we are
starting to see signs of progress across several areas of our
business. During the quarter, we saw sequential improvement in our
non-apparel categories, with both footwear and accessories comping
positively in the quarter. Performance in our apparel
business picked up at the tail end of the quarter when temperatures
around the country warmed up and our newer product started to
land. We are pleased to see this improvement in trend extend
into May.”
Mr. Lawrence continued, “Looking ahead, with our assortments
fully reflecting our new vision for merchandising and the launch of
our new customer loyalty program, we expect our business to inflect
back into positive comps during the back half of the year. I
am proud of the team’s hard work and dedication and look forward to
building upon our efforts to get our business back on track to
deliver sustainable long term sales and profitability growth.”
FIRST QUARTER RESULTS
Net sales decreased 7% to $100.4 million from $107.7 million in
the comparable prior year quarter. This decrease was due to a 16%
decrease in comparable sales compared to a 5% decrease in the
comparable prior year quarter. The decrease in comparable sales was
primarily due to a decline in boutique traffic and conversion
rates. This decrease was partially offset by sales from 65 net new
boutiques added since the comparable prior year quarter. The
Company opened 27 new boutiques and closed four boutiques during
the quarter, bringing the total boutique count to 744 at the end of
the quarter.
Gross profit, as a percent of net sales, decreased to 38.2% from
45.2% in the comparable prior year quarter. This unfavorable
variance was due to deleveraging of occupancy costs as well as a
decrease in merchandise margin. The decrease in merchandise
margin was due to increased markdowns.
Selling, general and administrative expenses increased 4% to
$42.9 million from $41.3 million in the comparable prior year
quarter. This increase was primarily due to the increased boutique
count.
Loss from operations was $4.5 million, or 4.5% of net sales,
compared to income from operations of $7.4 million, or 6.9% of net
sales, in the comparable prior year quarter.
The Company’s effective tax rate for the quarter was 13.4%
compared to 40.3% in the comparable prior year quarter. The
decrease in the Company’s effective tax rate was due to the lower
corporate tax rate under the Tax Cuts and Jobs Act enacted in
December 2017 as well additional tax expense recognized related to
the expiration of certain stock-based awards. Excluding the impact
of stock-based awards, the Company’s effective tax rate was
22.1%.
Net loss for the first quarter was $3.9 million, or $0.11
diluted loss per share, compared to net income of $4.3 million, or
$0.12 diluted earnings per share, in the comparable prior year
quarter.
BALANCE SHEET SUMMARY
Total cash and cash equivalents at the end of the quarter were
$21.8 million compared to $48.1 million at the end of the
comparable prior year quarter and with no debt outstanding. During
the first quarter of fiscal 2018, the Company repurchased 659,000
shares of its common stock at a cost of $3.5 million. At the end of
the first quarter of fiscal 2018, the Company had $40.2 million
remaining under its current authorized repurchase program.
The Company ended the first quarter with $32.7 million of
inventory on hand compared to $31.4 million at the end of the
comparable prior year quarter. Average ending inventory per
boutique decreased 5% versus the comparable prior year period. In
the first quarter of last year, average ending inventory per
boutique decreased 15%.
SECOND QUARTER AND FISCAL YEAR 2018
GUIDANCE
For the second quarter ending August 4, 2018, net sales are
expected to be in the range of $119 million to $122 million,
assuming a 6% to 9% decrease in comparable sales compared to the
prior year decrease of 3%. The Company plans to open four new
boutiques and close eight existing boutiques during the second
quarter. Diluted earnings per share is expected to be in the range
of $0.02 to $0.05.
The fiscal year 2018 sales and EPS guidance remains unchanged
from the initial guidance given on March 27, 2018. For the
fiscal year ending February 2, 2019, net sales are expected to be
in the range of $485 million to $499 million; assuming a low-single
digit decrease in comparable sales compared to the prior year
decrease of 11%. Diluted earnings per share are expected to be in
the range of $0.53 to $0.63 compared to prior year diluted earnings
per share of $0.43. This also compares to prior year adjusted
diluted earnings per share of $0.52, which excludes the $3.3
million, or $0.09 per diluted share, charge related to the
remeasurement of the Company’s deferred tax assets.
Capital expenditures for fiscal year 2018 are still expected to
be approximately $30 million. The Company still expects to open
approximately 35 boutiques, close approximately 20 boutiques and
refresh 80 to 90 boutiques in fiscal year 2018.
NEW REVOLVING CREDIT FACILITY
On May 25, 2018, the Company entered into a new asset based
revolving credit facility with J.P. Morgan Chase Bank providing for
commitments of up to $50 million and matures on May 25, 2023. This
new credit facility replaced the Company’s existing revolving
credit facility, which was scheduled to mature in August
2018. For a more detailed description, please see the
Company’s current report on Form 8-K filed with the Securities and
Exchange Commission on May 30, 2018.
Conference Call Information
A conference call to discuss the first quarter fiscal year 2018
results is scheduled for June 5, 2018, at 8:30 a.m. ET. A live
webcast of the conference call will be available in the investor
relations section of the Company’s website,
www.francescas.com. A replay of the call will be available
after the conclusion of the call and remain available until June
12, 2018. To access the telephone replay, listeners should dial
1-844-512-2921. The access code for the replay is 9333032. A replay
of the web cast will also be available shortly after the conclusion
of the call and will remain on the website for ninety days.
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 website; our ability to successfully open,
refresh and operate new boutiques each year; our ability to
efficiently source, distribute additional merchandise quantities
necessary to support our growth; and new tax legislation
developments or guidance that may influence our effective tax rate.
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 February 3, 2018 filed with the Securities and Exchange
Commission (“SEC”) on March 28, 2018 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.
SEC Regulation G – Non-GAAP Information
This press release includes non-GAAP adjusted diluted 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 facilitate a
meaningful evaluation of our fiscal year 2017 diluted earnings per
share on a comparable basis with our expected fiscal year 2018
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 744 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.
CompanyJean
Fontana
Kelly Dilts 832-494-2236646-277-1214
Kate Venturina 832-494-2233
IR@francescas.com
Francesca’s Holdings
CorporationConsolidated Statements of
Operations(In Thousands, Except Per Share Amounts,
Percentages and Basis Points)
|
|
|
|
Thirteen Weeks Ended |
|
|
|
May 5, 2018 |
|
April 29, 2017 |
|
Variance |
|
In USD |
|
As a %of NetSales(1) |
|
In USD |
|
As a %of NetSales(1) |
|
In USD |
|
% |
|
BasisPoints |
Net sales |
$ |
100,405 |
|
|
100.0 |
% |
|
$ |
107,689 |
|
|
100.0 |
% |
|
$ |
(7,284 |
) |
|
(7 |
)% |
|
- |
|
Cost of goods sold and
occupancy costs |
|
62,042 |
|
|
61.8 |
% |
|
|
59,006 |
|
|
54.8 |
% |
|
|
3,036 |
|
|
5 |
% |
|
700 |
|
Gross profit |
|
38,363 |
|
|
38.2 |
% |
|
|
48,683 |
|
|
45.2 |
% |
|
|
(10,320 |
) |
|
(21 |
)% |
|
(700 |
) |
Selling, general and
administrative expenses |
|
42,883 |
|
|
42.7 |
% |
|
|
41,281 |
|
|
38.3 |
% |
|
|
1,602 |
|
|
4 |
% |
|
440 |
|
(Loss) income from
operations |
|
(4,520 |
) |
|
(4.5 |
)% |
|
|
7,402 |
|
|
6.9 |
% |
|
|
(11,922 |
) |
|
(161 |
)% |
|
(1,140 |
) |
Interest expense |
|
(117 |
) |
|
(0.1 |
)% |
|
|
(113 |
) |
|
(0.1 |
)% |
|
|
(4 |
) |
|
4 |
% |
|
- |
|
Other income
(expense) |
|
150 |
|
|
0.1 |
% |
|
|
(25 |
) |
|
(0.0 |
)% |
|
|
175 |
|
|
700 |
% |
|
10 |
|
(Loss) income before
income tax expense |
|
(4,487 |
) |
|
(4.5 |
)% |
|
|
7,264 |
|
|
6.7 |
% |
|
|
(11,751 |
) |
|
(162 |
)% |
|
(1,120 |
) |
Income tax (benefit)
expense |
|
(602 |
) |
|
(0.6 |
)% |
|
|
2,931 |
|
|
2.7 |
% |
|
|
(3,533 |
) |
|
(121 |
)% |
|
(330 |
) |
Net (loss) income |
$ |
(3,885 |
) |
|
(3.9 |
)% |
|
$ |
4,333 |
|
|
4.0 |
% |
|
$ |
(8,218 |
) |
|
(190 |
)% |
|
(790 |
) |
(1) Percentage totals or differences in the
above table may not equal the sum or difference of the components
due to rounding. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss) earnings
per share |
$ |
(0.11 |
) |
|
|
|
$ |
0.12 |
|
|
|
|
|
|
|
|
|
Weighted average
diluted share count |
|
34,836 |
|
|
|
|
|
37,149 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable sales
change |
|
(16)% |
|
|
(5)% |
|
|
|
|
|
|
|
|
|
|
|
Francesca’s Holdings
CorporationConsolidated Balance
Sheets(In thousands, except share and per share
amounts)
|
|
|
|
May 5, 2018 |
|
|
February 3, 2018 |
|
|
April 29, 2017 |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
21,833 |
|
|
$ |
31,331 |
|
|
$ |
48,101 |
|
Accounts
receivable |
|
|
20,488 |
|
|
|
16,642 |
|
|
|
8,145 |
|
Inventories |
|
|
32,728 |
|
|
|
26,816 |
|
|
|
31,365 |
|
Prepaid
expenses and other current assets |
|
|
10,326 |
|
|
|
9,714 |
|
|
|
9,479 |
|
Total current
assets |
|
|
85,375 |
|
|
|
84,503 |
|
|
|
97,090 |
|
Property and equipment,
net |
|
|
89,321 |
|
|
|
87,702 |
|
|
|
81,577 |
|
Deferred income
taxes |
|
|
7,726 |
|
|
|
9,413 |
|
|
|
15,859 |
|
Other assets, net |
|
|
4,222 |
|
|
|
3,622 |
|
|
|
2,896 |
|
TOTAL
ASSETS |
|
$ |
186,644 |
|
|
$ |
185,240 |
|
|
$ |
197,422 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
24,827 |
|
|
$ |
17,801 |
|
|
$ |
21,305 |
|
Accrued
liabilities |
|
|
14,634 |
|
|
|
14,654 |
|
|
|
25,085 |
|
Total current
liabilities |
|
|
39,461 |
|
|
|
32,455 |
|
|
|
46,390 |
|
Landlord incentives and
deferred rent |
|
|
37,616 |
|
|
|
38,337 |
|
|
|
38,261 |
|
Total liabilities |
|
|
77,077 |
|
|
|
70,792 |
|
|
|
84,651 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
equity: |
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock - $0.01 par value, 80.0 million shares authorized;47.1
million, 46.3 million and 46.3 million shares issued at May5,
2018, February 3, 2018 and April 29, 2017, respectively. |
|
|
471 |
|
|
|
463 |
|
|
|
463 |
|
Additional paid-in capital |
|
|
111,823 |
|
|
|
111,439 |
|
|
|
110,267 |
|
Retained
earnings |
|
|
157,294 |
|
|
|
159,045 |
|
|
|
147,817 |
|
Treasury
stock, at cost – 11.1 million, 10.3 million and 9.2 millionshares
at May 5, 2018, February 3, 2018 and April 29,
2017,respectively. |
|
|
(160,021 |
) |
|
|
(156,499 |
) |
|
|
(145,776 |
) |
Total stockholders’
equity |
|
|
109,567 |
|
|
|
114,448 |
|
|
|
112,771 |
|
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
$ |
186,644 |
|
|
$ |
185,240 |
|
|
$ |
197,422 |
|
|
|
Francesca’s Holdings
CorporationConsolidated Statements of Cash
Flows(In thousands)
|
|
|
|
Thirteen Weeks Ended |
|
|
|
May 5, 2018 |
|
|
April 29, 2017 |
|
Cash Flows Provided by
Operating Activities: |
|
|
|
|
|
|
|
|
Net
(loss) income |
|
$ |
(3,885 |
) |
|
$ |
4,333 |
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
5,912 |
|
|
|
5,101 |
|
Stock-based compensation expense |
|
|
418 |
|
|
|
1,254 |
|
Loss on
sale of assets |
|
|
61 |
|
|
|
110 |
|
Deferred
income taxes |
|
|
980 |
|
|
|
(347 |
) |
Impairment charges |
|
|
27 |
|
|
|
- |
|
Changes
in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts
receivable |
|
|
(3,846 |
) |
|
|
(2,540 |
) |
Inventories |
|
|
(5,912 |
) |
|
|
(7,407 |
) |
Prepaid
expenses and other assets |
|
|
(1,276 |
) |
|
|
(1,638 |
) |
Accounts
payable |
|
|
8,721 |
|
|
|
10,341 |
|
Accrued
liabilities |
|
|
2,728 |
|
|
|
(676 |
) |
Landlord
incentives and deferred rent |
|
|
(721 |
) |
|
|
169 |
|
Net cash provided by
operating activities |
|
|
3,207 |
|
|
|
8,700 |
|
|
|
|
|
|
|
|
|
|
Cash Flows Used in
Investing Activities: |
|
|
|
|
|
|
|
|
Purchases
of property and equipment |
|
|
(8,725 |
) |
|
|
(4,634 |
) |
Net cash used in
investing activities |
|
|
(8,725 |
) |
|
|
(4,634 |
) |
|
|
|
|
|
|
|
|
|
Cash Flows Used in
Financing Activities: |
|
|
|
|
|
|
|
|
Repurchases of common stock |
|
|
(3,980 |
) |
|
|
(9,054 |
) |
Taxes
paid related to net settlement of equity awards |
|
|
- |
|
|
|
(113 |
) |
Net cash used in
financing activities |
|
|
(3,980 |
) |
|
|
(9,167 |
) |
|
|
|
|
|
|
|
|
|
Net decrease in cash
and cash equivalents |
|
|
(9,498 |
) |
|
|
(5,101 |
) |
Cash and cash
equivalents, beginning of year |
|
|
31,331 |
|
|
|
53,202 |
|
Cash and cash
equivalents, end of period |
|
$ |
21,833 |
|
|
$ |
48,101 |
|
|
|
|
|
|
|
|
|
|
Supplemental
Disclosures of Cash Flow Information: |
|
|
|
|
|
|
|
|
Cash paid
for income taxes |
|
$ |
24 |
|
|
$ |
73 |
|
Interest
paid |
|
$ |
47 |
|
|
$ |
49 |
|
|
|
|
|
|
|
|
|
|
Francesca’s Holdings
CorporationSupplemental Information
Quarterly Sales by Merchandise Category
|
|
|
|
Thirteen Weeks Ended |
|
|
|
May 5, 2018 |
|
April 29, 2017 |
|
Variance |
|
In USD |
|
As a %of Sales |
|
|
In USD |
|
As a % f Sales |
|
In Dollars |
|
% |
|
(in thousands, except
percentages) |
Apparel |
$ |
49,534 |
|
49.3 |
% |
|
$ |
60,012 |
|
|
55.7 |
% |
|
$ |
(10,478 |
) |
|
(17 |
)% |
Jewelry |
|
23,858 |
|
23.8 |
% |
|
|
23,771 |
|
|
22.1 |
% |
|
|
87 |
|
|
0 |
% |
Accessories |
|
15,484 |
|
15.4 |
% |
|
|
13,981 |
|
|
13.0 |
% |
|
|
1,503 |
|
|
11 |
% |
Gifts |
|
11,105 |
|
11.1 |
% |
|
|
11,115 |
|
|
10.3 |
% |
|
|
(10 |
) |
|
(0 |
)% |
Merchandise sales |
|
99,981 |
|
99.6 |
% |
|
|
108,879 |
|
|
101.1 |
% |
|
|
(8,898 |
) |
|
(8 |
)% |
Others(1) |
|
424 |
|
0.4 |
% |
|
|
(1,190 |
) |
|
(1.1 |
)% |
|
|
1,614 |
|
|
136 |
% |
Net sales |
$ |
100,405 |
|
100.0 |
% |
|
$ |
107,689 |
|
|
100.0 |
% |
|
$ |
(7,284 |
) |
|
(7 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes gift card
breakage income, shipping and change in return reserve.
Quarterly Comparable Sales
|
FY 2018 |
|
FY 2017 |
|
FY 2016 |
Q1 |
(16 |
)% |
|
(5 |
)% |
|
2 |
% |
Q2 |
|
|
(3 |
)% |
|
0 |
% |
Q3 |
|
|
(18 |
)% |
|
7 |
% |
Q4 |
|
|
(15 |
)% |
|
0 |
% |
Fiscal year |
|
|
(11 |
)% |
|
2 |
% |
|
|
|
|
|
|
|
|
Boutique Count
|
Thirteen WeeksEndedMay 5,
2018 |
|
Fiscal YearEndedFebruary
3, 2018 |
|
Thirteen WeeksEndedApril
29, 2017 |
|
Number of boutiques
open at the beginning of period |
721 |
|
671 |
|
671 |
|
Boutiques opened |
27 |
|
60 |
|
12 |
|
Boutiques closed |
(4 |
) |
(10 |
) |
(4 |
) |
Number of boutiques
open at the end of period |
744 |
|
721 |
|
679 |
|
|
|
Francescas (NASDAQ:FRAN)
Historical Stock Chart
From Jun 2024 to Jul 2024
Francescas (NASDAQ:FRAN)
Historical Stock Chart
From Jul 2023 to Jul 2024