Francesca's Holdings Corporation (FRAN – Snapshot Report) has a new CEO but comparable-store-sales continue to slide. Can this Zacks Rank #5 (Strong Sell) retailer turn it around?
Francesca's Holdings is a specialty woman's retailer, operating 538 boutiques in 47 states and the District of Columbia carrying apparel, shoes, jewelry and accessories. It also operates an ecommerce site on francescas.com.
retail Veteran Announced as New CEO
On Dec 5, Francesca's announced that Michael Barnes, the former CEO of Signet Jewelers, would become CEO of Francesca's. He was also one of the original employees at Fossil and spent more than 25 years there growing the brand.
Francesca's has also been on a growth spurt, with dozens of store openings and a newly revamped web site.
Comparable Store Sales Fell Again
On Dec 10, Francesca's announced its fiscal 2014 third quarter results. While it met the Zacks Consensus Estimate of $0.17, same-store sales continued to slide.
In prior quarters, the company had blamed it on the poor weather and high inventories. But the weather wasn't a factor in the third quarter of this year.
Comparable-store-sales fell 6% but one bright spot was the direct-to-consumer sales, which jumped 53% from the year ago quarter. Through the third quarter, direct-to-consumer sales were up 76% over 2013.
However, as many retailers have been reporting, the environment remains increasingly promotional. Gross profit decreased to 47.3% from 50.7% in the third quarter of the prior year due to increased markdowns and continuing promotions.
The company also continued to open new stores, opening 12 boutiques in the quarter. It has added 87 new boutiques through the third quarter.
It's also been opening outlets and has opened 13 of those this year for a total of 16 stores.
Outlook for the Fourth Quarter is Still Grim
Citing the highly promotional holiday retail environment, Francesca's warned about the fourth quarter. It said its apparel business remained “challenged” and expected aggressive markdowns in order to clear inventory.
