francesca’s® Provides Update on COVID-19 Response and Reports Select Preliminary First Quarter Fiscal Year 2020 Financial Results
- Reopened 593 boutiques as of
June 12, 2020
- First quarter 2020 net sales decreased 50% to
- Delays filing of Quarterly Report on Form 10-Q
“Looking ahead, we are optimistic about our future as we execute our differentiated business model. Our boutiques provide a broad end-use assortment that is curated and merchandised for outfitting while at the same time offer a treasure hunt experience to our customers. As we begin crafting the future for francesca’s, there is also a focus on enhancing our omni channel capabilities, specifically through re-platforming our e-commerce site to support greater scale. As we combine our customer centric approach with omni channel capabilities we see tremendous opportunity to gain market share and get us back on track to deliver profitable growth.”
The COVID-19 pandemic resulted in the temporary closure of all of the Company’s 703 boutiques beginning on
As a result of the COVID-19 pandemic and as previously disclosed, the Company is delaying the filing of its Quarterly Report on Form 10-Q (“Form 10-Q”) for the thirteen weeks ended
CASH POSITION SUMMARY
As the Company’s boutiques began to reopen, its cash position increased to approximately
SELECT PRELIMINARY FIRST QUARTER 2020 FINANCIALS
|For or As of the Thirteen Weeks Ended|
|(in thousands, except percentages)|
|Gross (loss) profit||(2,871||)||30,327|
|Selling, general and administrative expenses||24,951||39,994|
|Adjusted selling, general and administrative expenses||24,951(1)||37,999(2)|
|Cash and cash equivalents||$||14,324||$||17,462|
|Current portion of long-term debt||15,000(3)||-|
|Long-term debt||$||- (3)||$||10,000|
|Net cash used in operating activities||$||(8,034||)||$||(25||)|
|Net cash used in investing activities||(481||)||(2,616||)|
|Net cash provided by financing activities||$||5,000||$||-|
- There were no non-GAAP adjustments for SG&A for the thirteen weeks ended
May 2, 2020.
- Please see the reconciliation of adjusted SG&A and adjusted loss from operations, each a non-GAAP financial measure, to the most directly comparable GAAP financial measure provided in the tables at the end of this press release.
- Although the maturity of the Company’s credit facilities are beyond 12 months from the balance sheet, the Company classified the outstanding amount as current liability due to uncertainties concerning the Company’s future liquidity and on-going covenant compliance as a result of the impact of the COVID-19 pandemic on the Company’s business.
SELECT PRELIMINARY FIRST QUARTER RESULTS
Net sales decreased 50% to
Gross loss, as a percent of sales, was (6.6)% as compared to gross profit, as a percentage of sales, of 34.8% in the prior year quarter. This unfavorable variance was primarily due to lower deleverage in occupancy costs as a result of lower sales. Occupancy costs include the full lease expense for all boutiques for the month of
Selling, general and administrative (SG&A) expenses decreased
SELECT BALANCE SHEET SUMMARY
Total cash and cash equivalents at the end of the first quarter were
The Company ended the quarter with
The Company’s announced select preliminary results for its fiscal first quarter ended
Conference Call Information
A conference call to discuss the preliminary first quarter fiscal year 2020 results is scheduled for
Certain statements in this release are "forward-looking statements" made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements reflect the Company’s current expectations or beliefs concerning future events and are subject to various risks and uncertainties that may cause actual results to differ materially from those that are expected. These risks and uncertainties include, but are not limited to, the following: risks arising from the COVID-19 pandemic, including the related impact on the Company’s liquidity, changes in commercial and consumer spending and economic conditions generally, the duration of government-mandated and voluntary shutdowns and the speed with which the Company’s boutiques can safely be reopened and its ecommerce and distribution facilities return to normal capacity and the level of customer demand following reopening; the Company’s ability to continue as a going concern; the Company’s ability to satisfy covenant requirements under its asset based revolving credit agreement and term loan credit agreement and make payments of principal and interest as they come due; the risk that the Company may not be able to successfully execute its turnaround plan; the risk that the Company may not be able to successfully integrate its new Chief Executive Officer, the risk that the Company may not be able to identify suitably qualified and experienced candidates to add to its Board of Directors; the risk that the Company cannot anticipate, identify and respond quickly to changing fashion trends and customer preferences or changes in consumer environment, including changing expectations of service and experience in boutiques and online, and evolve its business model; the Company’s ability to attract a sufficient number of customers to its boutiques or sell sufficient quantities of its merchandise through its ecommerce website; the Company’s ability to successfully open, close, refresh, and operate its boutiques each year; the Company’s ability to efficiently source and distribute merchandise quantities necessary to support its operations; and the impact of potential tariff increases or new tariffs. For additional information regarding these and other risks and uncertainties that could cause actual results to differ materially from those contained in the Company’s forward-looking statements, please refer to "Risk Factors" in the Company’s Annual Report on Form 10-K for the year ended
This press release includes non-GAAP adjusted SG&A which is a non-GAAP financial measure. The Company believes this non-GAAP financial measure not only provides the Company’s management with comparable financial data for internal financial analysis but also provides meaningful supplemental information to investors. Specifically, this non-GAAP financial measure allows investors to better understand the performance of the business and facilitate a meaningful evaluation of the Company’s first quarter fiscal year 2020 SG&A on a comparable basis with the Company’s first quarter fiscal year 2019 SG&A. This non-GAAP measure should be considered a supplement to, and not as a substitute for or superior to, financial measures calculated in accordance with GAAP.
francesca's® is a specialty retailer which operates a nationwide-chain of boutiques providing customers a unique, fun and personalized shopping experience. The merchandise assortment is a diverse and balanced mix of apparel, jewelry, accessories and gifts. Today, francesca's® operates approximately 703 boutiques in 47 states and the
Quarterly Sales by Merchandise Category
|Thirteen Weeks Ended|
|In USD||As a % of Sales||In USD||As a % of Sales||In Dollars||%|
|(in thousands, except percentages)|
(1) Includes gift card breakage income, shipping and change in return reserve.
|Thirteen Weeks Ended
||Fiscal Year Ended
||Thirteen Weeks Ended
|Number of boutiques open at the beginning of period||711||727||727|
|Number of boutiques open at the end of period||703||711||722|
GAAP to Non-GAAP Reconciliation
(In Thousands, Except Per Share Amounts and Percentages)
|Thirteen Weeks Ended
|GAAP||Professional Fees (1)||Severance Benefits and Other Payroll Costs (2)||Reversal of Stock-based Compensation (3)||Non GAAP|
(1) Consists of consulting expenses associated with the Company’s review of strategic and financial alternatives as well as the implementation of the turnaround plan that commenced in
(2) Consists of severance benefits and other payroll costs associated with the turnaround plan.
(3) Reversal of stock-based compensation associated with the departure of certain employees.
Source: Francesca's Holdings Corporation