Francesca’s profit slips in Q2; reining in expansion

Houston – Rising expenses resulted in falling profits at Francesca’s Holdings Corp., which plans to slow its store expansion going forward.



Francesca’s net income fell 10% to $9.3 million in the second quarter, from $10.3 million the prior year period.



Rising boutique and payroll expenses related to new store openings were the primary factor in decreasing Francesca’s profits. However, new store openings also helped drive a 9% increase in net sales, to $106.03 million from $97.02 million.



Same-store sales fell 4%, which the retailer attributed to lower comparable transactions.



The company is on track to open 83 stores this year. Looking ahead to fiscal 2016, it expects to open fewer stores compared to the average of 85 locations it has opened annually in the last three fiscal years. The retailer also plans to start development of its direct-to-consumer site.



For the third quarter of fiscal 2015, Francesca’s expects net sales between $98 million and $101 million, with same-store sales ranging from flat to a low-single-digit decrease. For the full fiscal year, Francesca’s expects net sales of $416-424 million, assuming a low-single-digit decrease in same-store sales.