Francesca's Holdings Corporation Reports Financial Results for the Fiscal Fourth Quarter and Year Ended January 28, 2012
Fourth quarter earnings per share increased 72.7%
Fourth quarter net sales increased 54.6%;
Fourth quarter comparable boutique sales increased 14.7%
For the fiscal fourth quarter ended
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Net sales increased 54.6% to
$61.7 million from$39.9 million in the same prior year period.
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Comparable boutique sales increased by 14.7% following an increase of 14.5% in the same prior year period.
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Gross margin was 52.4% compared to 51.6% in the same prior year period. Gross margin increased compared to the prior year primarily as a result of leveraging occupancy costs.
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Income from operations increased 62.3% to
$14.5 million compared to$8.9 million in the same prior year period. As a percentage of net sales, income from operations was 23.4% compared to 22.3% in the same period last year driven by leverage in selling, general and administrative expenses in addition to the gross margin expansion. Included in selling, general and administrative expenses was$0.6 million of expenses associated with the Company's secondary offering.
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Interest expense was
$0.3 million compared to$1.6 million in the same prior year period.
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Net income was
$8.4 million , or$0.19 per diluted share based upon 44.5 million weighted average shares outstanding. This was an increase of 93.0% over the same prior year period net income of$4.3 million , or$0.11 per fully diluted share based on 41.0 million weighted average shares.
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At
January 28, 2012 , the Company operated 283 locations compared to 207 at the end of the same prior year period.
For the fiscal year ended
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Net sales increased 51.0% to
$204.2 million from$135.2 million in the prior year. Comparable boutique sales increased 10.4% following a 15.2% increase in the prior year.
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Gross margin was 52.3% compared to 51.9% in the prior year (with pro forma adjustment the prior year was 52.4%). Gross margin benefitted from a favorable sales mix and leveraging occupancy costs.
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Income from operations grew by 46.8% to
$43.5 million from$29.6 million in the prior year. Results for the year include a$2.3 million charge associated with the accelerated recognition of stock-based compensation expense and$0.6 million of expenses associated with the Company's secondary offering. Income from operations as a percentage of net sales was 21.3% compared to 21.9% in the prior year. Adjusting for the accelerated stock-based compensation and offering expense, income from operations was 22.7% as a percentage of net sales. The corresponding prior year pro forma amount was 24.2%
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Interest expense was
$4.9 million compared to$1.6 million in the prior year.
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Net income was
$22.5 million , or$0.52 per diluted share based on 42.9 million weighted average shares outstanding. This compares to net income of$16.9 million , or$0.41 per diluted share based on 40.9 million weighted average shares outstanding.
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Adjusted net income was
$25.2 million , or$0.58 per diluted share, excluding a$1.6 million pretax, or$0.02 per diluted share charge for the early extinguishment of debt under the Company's prior senior secured credit facility recorded in the second quarter, a$2.3 million pretax, or$0.03 per diluted share charge for the recognition of stock-based compensation expense associated with the accelerated vesting of options in connection with the Company's initial public offering, recorded in the third quarter and the aforementioned$0.6 million , or$0.01 per diluted share, of expenses related to the Company's secondary offering. The corresponding pro forma amounts in the prior year period were a net income of$18.7 million and diluted earnings per share of$0.46 .
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Adjusted income from operations, adjusted net income and adjusted diluted earnings per share are non-GAAP measures. The Company believes the excluded items are not indicative of the performance of its core business and that by providing this supplemental disclosure to investors it will facilitate comparisons of its past and present performance. A reconciliation of income from operations, as reported, and net income and diluted earnings per share, as reported, are included in this press release. For the year ended
January 28, 2012 , these non-GAAP financial measures exclude the charge for early extinguishment of debt under the Company's prior senior secured credit facility, stock-based compensation associated with the accelerated vesting of options in connection with the Company's initial public offering and costs associated with the Company's secondary offering. For the prior year, the same measures exclude the charge for stock-based compensation associated with the accelerated vesting of options in connection with the CCMP acquisition, CCMP acquisition transaction costs and correction of prior year construction period rent.
Balance Sheet highlights as of Fiscal Year End
Cash and cash equivalents were
Inventories were
Borrowings decreased
First Quarter and Fiscal 2012 Outlook
For the first quarter ending
For the year ending
The Company uses the NRF calendar; therefore fiscal year 2012 will be a 53 week year. We estimate that the additional week will contribute approximately
Conference Call Information
A conference call to discuss fourth quarter and fiscal year 2011 results is scheduled for
SEC Regulation G — Non-GAAP Information
This press release includes non-GAAP adjusted income from operations, adjusted net income and adjusted diluted earnings per share, each a non-GAAP financial measure. For the year-ended
Forward-Looking Statements
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. 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 we expected, including: possible adverse changes in general economic conditions and their impact on consumer confidence and spending; possible inability to predict and respond in a timely manner to changes in consumer demand; possible loss of key management or inability to attract and retain the talent required for our business; possible inability to maintain and enhance our brand; possible inability to successfully implement our growth strategies or manage our growing business; possible
inability to successfully open new boutiques as planned; and possible inability to sustain levels of comparable-boutique sales. For a discussion of these and other risks and uncertainties that could cause actual results to differ materially from those contained in our forward-looking statements, please refer to "Risk Factors" in our Prospectus dated
About
Francesca's Collections is a growing specialty retailer with retail locations designed and merchandised to feel like independently owned, upscale boutiques providing customers a fun and differentiated shopping experience. The merchandise assortment is a diverse and uniquely balanced mix of high-quality, trend-right apparel, jewelry, accessories and gifts at attractive prices. Francesca's Collections appeals to the 18-35 year-old, fashion conscious, female customer, although the Company finds that women of all ages are attracted to the eclectic and sophisticated merchandise selection and boutique setting. Francesca's Collections' boutiques carry a broad selection but limited quantities of individual styles and new merchandise is introduced five days a week.
ADDITIONAL INFORMATION
For additional information on
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CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
(In thousands, except per share data and percentages) | ||||
Thirteen Weeks Ended | Fiscal Year Ended | |||
January 28, 2012 |
January 29, 2011 |
January 28, 2012 |
January 29, 2011 |
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(In thousands except per share data) | ||||
Net sales | $ 61,652 | $ 39,882 | $ 204,158 | $ 135,176 |
Cost of goods sold and occupancy costs | 29,317 | 19,290 | 97,365 | 65,008 |
Gross profit | 32,335 | 20,592 | 106,793 | 70,168 |
Selling, general and administrative expenses | 17,875 | 11,680 | 63,262 | 40,525 |
Income from operations | 14,460 | 8,912 | 43,531 | 29,643 |
Interest expense | (339) | (1,630) | (4,868) | (1,633) |
Loss on early extinguishment of debt | — | — | (1,591) | — |
Other income | 36 | (108) | 284 | (2) |
Income before income tax expense | 14,157 | 7,174 | 37,356 | 28,008 |
Income tax expense | 5,804 | 2,846 | 14,855 | 11,113 |
Net income | $ 8,353 | $ 4,328 | $ 22,501 | $ 16,895 |
Basic earnings (loss) per common share | $ 0.19 | $ 0.11 | $ 0.53 | $ 0.43 |
Diluted earnings (loss) per common share | $ 0.19 | $ 0.11 | $ 0.52 | $ 0.41 |
Dividends declared per common share | — | $ 2.39 | — | $ 2.39 |
Weighted average shares outstanding: | ||||
Basic share | 43,539 | 40,446 | 42,087 | 39,385 |
Diluted share | 44,547 | 40,991 | 42,948 | 40,907 |
Percentage of net sales: | ||||
Net sales | 100.0 % | 100.0 % | 100.0 % | 100.0 % |
Cost of goods sold and occupancy costs | 47.6 % | 48.4 % | 47.7 % | 48.1 % |
Gross profit | 52.4% | 51.6% | 52.3% | 51.9 % |
Selling, general and administrative expenses | 29.0% | 29.3% | 31.0 % | 30.0 % |
Income from operations | 23.4 % | 22.3% | 21.3 % | 21.9 % |
Interest income (expense) | (0.5)% | (4.1)% | (2.4)% | (1.2)% |
Loss on early extinguishment of debt | 0.0 % | 0.0 % | (0.8) % | 0.0 % |
Other income (expense) | 0.0 % | (0.2)% | 0.2% | 0.0 % |
Income before income tax expense | 22.9% | 18.0 % | 18.3 % | 20.7 % |
Income tax expense | 9.4 % | 7.1 % | 7.3 % | 8.2 % |
Net income | 13.5% | 10.9 % | 11.0% | 12.5 % |
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RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED INCOME FROM OPERATIONS, | ||||
ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS PER SHARE | ||||
(In thousands, except per share data and percentages) | ||||
Adjusted Income from Operations | ||||
Fiscal Year Ended | ||||
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In Dollars |
As a % of Sales |
In Dollars |
As a % of Sales |
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Income from operations, as reported | $ 43,531 | 21.3% | $ 29,643 | 21.9% |
Add backs: | ||||
Stock-based compensation associated with accelerated vesting | 2,251 | 1.1% | 1,025 | 0.8% |
Acquisition transaction costs | — | — | 1,315 | 1.0% |
Correction of prior year construction period rent | — | — | 680 | 0.5% |
Expenses related to the secondary offering | 611 | 0.3% | — | — |
Adjusted income from operations | $ 46,393 | 22.7% | $ 32,663 | 24.2% |
Adjusted Net Income and Diluted Earnings Per Share | ||||
Fiscal Year Ended | ||||
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In Dollars |
Per Diluted Share |
In Dollars |
Per Diluted Share |
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Net income and diluted earnings per share, as reported | $ 22,501 | $ 0.52 | $ 16,895 | $ 0.41 |
Add backs: | ||||
Stock-based compensation associated with accelerated vesting (net of |
1,354 | 0.03 | 618 | 0.02 |
Acquisition transaction costs (net of |
— | — | 793 | 0.02 |
Correction of prior year prior-year construction period rent (net of |
— | — | 410 | 0.01 |
Expenses related to the secondary offering (net of |
368 | 0.01 | — | — |
Loss on early extinguishment of debt (net of |
958 | 0.02 | — | — |
Adjusted net income and diluted earnings per share | $ 25,181 | $ 0.58 | $ 18,716 | 0.46 |
(1) The effective tax rate of 39.8% and 39.7% for the fiscal years 2011 and 2010, respectively, was used in calculating the tax effect. |
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CONSOLIDATED BALANCE SHEETS | ||
(In thousands) | ||
January 28, 2012 |
January 29, 2011 |
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ASSETS | ||
Current assets: | ||
Cash and cash equivalents | $ 14,046 | $ 12,516 |
Accounts receivable | 2,156 | 4,054 |
Inventories | 14,688 | 11,959 |
Deferred income taxes | 2,352 | 1,321 |
Prepaid expenses and other current assets | 2,799 | 1,871 |
Total current assets | 36,041 | 31,721 |
Property and equipment, net | 33,199 | 21,300 |
Deferred income taxes | 952 | 2,704 |
Other assets, net | 2,120 | 3,399 |
TOTAL ASSETS | $ 72,312 | $ 59,124 |
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) | ||
Current liabilities: | ||
Accounts payable | $ 8,627 | $ 6,146 |
Accrued liabilities | 9,893 | 6,410 |
Current portion of long-term debt | — | 5,938 |
Total current liabilities | 18,520 | 18,494 |
Deferred and accrued rents | 14,890 | 8,223 |
Long-term debt | 22,000 | 87,875 |
Total liabilities | 55,410 | 114,592 |
Commitments and contingencies | ||
Shareholders' equity (deficit): | ||
Common stock—$.01 par value, 80.0 million shares authorized, 43.5 million and 40.5 million shares issued and outstanding at January 28, 2012 and January 29, 2011, respectively | 435 | 405 |
Additional paid-in capital | 77,071 | 27,232 |
Accumulated deficit | (60,604) | (83,105) |
Total shareholders' equity (deficit) | 16,902 | (55,468) |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) | $ 72,312 | $ 59,124 |
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CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
(In thousands) | |||
For the Fiscal Year Ended | |||
January 28, 2012 |
January 29, 2011 |
January 30, 2010 |
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Cash Flows Provided by Operating Activities: | |||
Net income | $ 22,501 | $ 16,895 | $ 10,604 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 4,936 | 2,377 | 1,215 |
Stock-based compensation expense | 4,671 | 2,400 | 99 |
Excess tax benefit from stock-based compensation | (449) | (1,757) | — |
Loss on sale of assets | 23 | 25 | — |
Loss on early extinguishment of debt | 1,591 | — | — |
Amortization of debt issuance costs | 537 | 158 | — |
Deferred income taxes | 721 | (2,685) | (833) |
Changes in assets and liabilities: | |||
Accounts receivables | 1,898 | (3,557) | (126) |
Inventories | (2,729 ) | (5,581) | (794) |
Prepaid expenses and other assets | (309) | (1,549) | (573) |
Accounts payable | 2,481 | 3,443 | 1,434 |
Accrued liabilities | (566) | 3,874 | 1,007 |
Deferred and accrued rents | 6,667 | 5,999 | 1,440 |
Income tax payable | 4,498 | 978 | (196) |
Net cash provided by operating activities | 46,471 | 21,020 | 13,277 |
Cash Flows Used in Investing Activities: | |||
Purchase of property and equipment | (16,894) | (16,208) | (5,538) |
Other | 36 | — | — |
Net cash used in investing activities | (16,858) | (16,208) | (5,538) |
Cash Flows Used in Financing Activities: | |||
Proceeds from issuance of stock in initial public offering, net of costs | 44,245 | — | — |
Proceeds from borrowings under the new revolving credit facility | 41,000 | — | — |
Proceeds from borrowings under the prior senior secured credit facility | — | 95,000 | — |
Repayment of borrowings under the new revolving credit facility | (19,000) | — | — |
Repayment of borrowings under the prior senior secured credit facility | (93,813) | (1,187) | — |
Dividends | — | (100,000) | — |
Excess tax benefit from stock-based compensation | 449 | 1,757 | — |
Payment of debt issuance costs | (1,468) | (2,137) | — |
Proceeds from the exercise of stock options | 504 | 504 | — |
Net cash used in financing activities | (28,083) | (6,063) | — |
Net increase (decrease) in cash and cash equivalents | 1,530 | (1,251) | 7,739 |
Cash and cash equivalents, beginning of year | 12,516 | 13,767 | 6,028 |
Cash and cash equivalents, end of year | $ 14,046 | $ 12,516 | $ 13,767 |
Supplemental Disclosures of Cash Flow Information: | |||
Cash paid for income taxes | 8,971 | 13,509 | 7,946 |
Interest paid | 5,569 | 163 | — |
Supplemental Non-Cash Financing Activities: | |||
Accrual of dividends on Preferred Stock — Series A | — | — | 2,022 |
Increase in redemption value of Preferred Stock Series A | — | — | 60,271 |
CONTACT:Source: Francesca's CollectionsICR, Inc. Jean Fontana /Joseph Teklits 203-682-8200 jean.fontana@icrinc.com
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