Francesca’s Q3 net income falls 19% amid higher costs; lowers outlook

Houston – Francesca’s Holding Corp. reported that its net income dropped 19% to $7.3 million in the third quarter of fiscal 2014 from $8.7 million the same period the prior year. Increases in cost of goods sold and selling, general and administrative (SG&A) expenses drove the decline in profit. The specialty retailer also lowered its earnings outlook for the year.



Francesca’s plans to open one new store in the fourth quarter, bringing total new stores opened in the fiscal year to 88.



Net sales rose 9% to $87.11 million from $79.63 million, aided by revenue from new stores. Same-store sales dropped 6%, although increased traffic helped boost direct-to-consumer sales 53%.



"While the current financial performance is disappointing, I am optimistic about the future of the Francesca's brand,” said Michael W. Barnes, chairman, president and CEO, “After just one week with the Company, I am energized by what I believe to be a distinct business model with enormous potential. My first priority, upon evaluation of the entire business, will be to create a strong foundation for growth.”



Francesca’s expects increases in net and same-store sales for the fourth quarter and fiscal year, although it reduced its predictions from earlier guidance.