Francesca’s profits stay above expectations; will open new stores

Francesca’s Holdings Corp. saw net income decline, but still beat Wall Street predictions, in the first quarter of fiscal 2016.



The specialty apparel retailer reported net income of $7.08 million, down 2% from $7.24 million the same quarter a year earlier. Higher selling, general and administrative (S,G&A) expenses offset improvements in gross profit.



Net sales climbed 12% to $106.1 million from $95.01 million. This increase was due to a 2% increase in same-store sales, driven by an increase in the number of transactions both at stores and online as well as the opening of 48 net new stores since the comparable prior year period. E-commerce comparable sales increased 38% to $5.2 million, driven by increased website traffic and conversion rates.



The company opened 22 new stores and closed one underperforming store during the quarter, bringing total store count to 637 as of April 30, 2016. Francesca’s plans to open 50 to 60 new stores and close five to 10 unprofitable stores during the fiscal year, including 15-20 openings and one to five closures in the second quarter.



For the second quarter net sales are expected to be in the range of $106 million to $110 million; assuming a mid-single digit decrease in comparable sales. For the full year, the retailer expects net sales to be in the range of $460 million to $480 million; assuming a flat to a low-single digit decrease in same-store sales.



“We continue to see weakness in the overall retail environment particularly in apparel with declines in traffic and heightened promotions,” said Richard Kunes, interim chairman, president and CEO. “Our second quarter and updated full year guidance reflects this recent trend and our assumption that the environment will not further deteriorate in the back half of the year. We remain committed to our Vision 2020 plan as our executive team continues to focus on enhancing brand awareness, delivering a compelling merchandise offering and developing our ecommerce strategy, while continuing to provide a unique and exceptional guest experience in our boutiques.”