Francesca’s Q2 net disappoints; on track for 87 new stores

Houston -- Francesca's Holdings Corp. reported second-quarter results that missed analysts' estimates, hurt by lower traffic. The company expects the weakness to continue.



Net income for the period ended Aug. 3 grew about 15%, from $12.7 million to $14.6 million.



Net sales rose 17% to $89.6 million. Same-store sales, including direct-to-consumer sales, decreased 1%.



Francesca’s credited the opening of 79 new stores since second quarter 2012 as the primary driver of higher net sales. Performance was strongest in jewelry, outpacing increases in accessories and apparel, and a decline in gifts. The retailer still expected better results.



Neill P. Davis, CEO of Francesca’s, said the chain’s second quarter sales performance was softer than anticipated, but that it able to maintain strong profitability with operating income margins only modestly below the prior year levels.



“Our performance in the quarter reflects the anniversary of very strong rates of growth in the prior year; lower levels of customer traffic most evident in the later part of the second quarter and the lack of a dominant apparel fashion trend," David said.



Looking ahead, Francesca’s expects to open 11 new stores during the third quarter of this year and a total of 87 new stores during fiscal 2013.



During the third quarter, the retailer expects net sales between $78 million and $80 million, and net sales between $343 million and $349.5 million during the fiscal year. Same-store sales are expected to decline in the third quarter and range from declining the flat during the fiscal year.