Francesca's Holdings Corporation Reports Financial Results for the Fiscal First Quarter Ended April 28, 2012
Comparable Boutique Sales Increased 15.5%
Earnings Per Diluted Share Doubled to
For the fiscal first quarter ended
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Net sales increased 48.6% to
$61.3 million from$41.3 million in the same prior year period.
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Comparable boutique sales increased by 15.5% following an increase of 14.7% in the same prior year period.
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Gross margin increased to 53.1% compared to 52.4% in the same prior year period primarily as a result of leveraging occupancy costs.
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Income from operations increased 74.1% to
$14.7 million compared to$8.4 million in the same prior year period. As a percentage of net sales, income from operations increased to 23.9% compared to 20.4% 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$0.5 million of expenses associated with the follow-on offering of the Company's common stock completed in April 2012.
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Interest expense decreased to
$0.3 million compared to$2.0 million in the same prior year period principally due to the use of proceeds from our IPO inJuly 2011 plus cash flow from operations to reduce the average outstanding loan balance under our revolving credit facility.
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Net income increased 123.1% to
$8.7 million compared to$3.9 million in the same prior year period. Diluted earnings per share doubled to$0.20 based upon 44.7 million weighted average shares outstanding compared to diluted earnings per share of$0.10 based on 41.0 million weighted average shares in the same prior year period.
- At the end of the fiscal first quarter of 2012, the Company operated 327 boutiques in 43 states compared to 249 boutiques in 38 states at the end of the same prior year period.
Balance Sheet highlights as of
Cash and cash equivalents totaled
Inventory was
Borrowings decreased
Second Quarter and Fiscal 2012 Outlook
For the second quarter ending
For the full fiscal year ending
Please see the table of this release that refers to reconciliation of GAAP net income and diluted earnings per share to non-GAAP adjusted net income and adjusted diluted earnings per share.
The Company uses the
Conference Call Information
A conference call to discuss first quarter results is scheduled for
SEC Regulation G — Non-GAAP Information
This press release includes non-GAAP adjusted net income and adjusted diluted earnings per share, each a non-GAAP financial measure. We have reconciled these non-GAAP financial measures with the most directly comparable GAAP financial measures both in the text above and the table that refers to such in this release. We believe that these non-GAAP financial measures not only provide our management with comparable financial data for internal financial analysis but also provide meaningful supplemental information to investors. Specifically, these non-GAAP financial measures allow investors to better understand the performance of our business and facilitate a meaningful evaluation of our quarterly and fiscal year 2012 diluted earnings per share and actual results on a comparable basis with our quarterly and fiscal year 2011 results. These non-GAAP measures should be considered a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
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 Annual Report on Form 10-K filed with the
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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Unaudited Consolidated Statements of Operations | |||
(In thousands, except per share data and percentages) | |||
Thirteen Weeks Ended | |||
April 28, 2012 |
April 30, 2011 |
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(in thousands, except percentages) | |||
Net sales | $ 61,322 | $ 41,265 | |
Cost of goods sold and occupancy costs | 28,779 | 19,641 | |
Gross profit | 32,543 | 21,624 | |
Selling, general and administrative expenses | 17,885 | 13,205 | |
Income from operations | 14,658 | 8,419 | |
Interest expense | (255) | (2,008) | |
Other income | 37 | 34 | |
Income before income tax expense | 14,440 | 6,445 | |
Income tax expense | 5,698 | 2,527 | |
Net income | $ 8,742 | $ 3,918 | |
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$ 0.20 | $ 0.10 | |
Diluted earnings per common share | $ 0.20 | $ 0.10 | |
Weighted average shares outstanding: | |||
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43,573 | 40,466 | |
Diluted shares | 44,702 | 40,967 | |
Percentage of Sales(1): | |||
Net sales | 100.0% | 100.0% | |
Cost of goods sold and occupancy costs | 46.9% | 47.6% | |
Gross profit | 53.1% | 52.4% | |
Selling, general and administrative expenses | 29.2% | 32.0% | |
Income from operations | 23.9% | 20.4% | |
Interest expense | (0.4)% | (4.9)% | |
Other income | 0.1% | 0.1% | |
Income before income tax expense | 23.5% | 15.6% | |
Income tax expense | 9.3% | 6.1% | |
Net income | 14.3% | 9.5% | |
(1) Percentage totals in the above table may not equal the sum of the components due to rounding. |
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RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED NET INCOME | ||
AND ADJUSTED DILUTED EARNINGS PER SHARE | ||
(In thousands, except per share data) | ||
Second Quarter Guidance | ||
Thirteen Weeks Ended | ||
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In Dollars |
Per Diluted Share |
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Net income and diluted earnings per share, as reported | $ 5,485 | $ 0.13 |
Add back: | ||
Loss on early extinguishment of debt (net of |
969(1) | 0.02 |
Adjusted net income and diluted earnings per share | $ 6,454 | $ 0.15 |
Weighted average diluted shares outstanding | 41,513 | |
(1) The pretax impact of the loss on early extinguishment of debt was |
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Full Year Guidance |
Fiscal Year Ended | ||||
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In Dollars(1) |
Per Diluted Share |
In Dollars(1) |
Per Diluted Share |
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Net income and diluted earnings per share, as reported | $ 39,000 — 39,900 | $ 0.87 — 0.89 | $ 22,501 | $ 0.52 |
Add backs: | ||||
Stock-based compensation associated with accelerated vesting (net of |
— | — | 1,354(3) | 0.03 |
Expenses related to the follow-on offering (net of |
287(2) | .01 | 368(3) | 0.01 |
Loss on early extinguishment of debt (net of |
— | — | 958(3) | 0.02 |
Relocation expenses (net of |
397(2) | .01 | — | — |
Adjusted net income and diluted earnings per share | $ 39,684 — 40,584 | $ 0.89 — 0.91 | 25,181 | $ 0.58 |
Weighted average diluted shares outstanding | 44,800 | 42,948 | ||
(1) The tax impact was calculated using the effective tax rate of 40.0% and 39.8% for fiscal years 2012 and 2011, respectively. | ||||
(2) The pretax impact of non-recurring adjustments in fiscal year 2012 totaled |
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(3) The pretax impact of non-recurring adjustments in fiscal year 2011 totaled |
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Unaudited Consolidated Balance Sheets | |||
(In thousands) | |||
April 28, 2012 |
January 28, 2012 |
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ASSETS | |||
Current assets: | |||
Cash and cash equivalents | $ 8,221 | $ 14,046 | $ 12,806 |
Accounts receivable | 5,891 | 2,156 | 5,609 |
Inventories | 17,850 | 14,688 | 13,471 |
Deferred income taxes | 2,456 | 2,352 | 1,394 |
Prepaid expenses and other current assets | 3,040 | 2,799 | 3,143 |
Total current assets | 37,458 | 36,041 | 36,423 |
Property and equipment, net | 38,205 | 33,199 | 26,973 |
Deferred income taxes | 2,200 | 952 | 955 |
Other assets, net | 2,069 | 2,120 | 3,317 |
TOTAL ASSETS | $ 79,932 | $ 72,312 | $ 67,668 |
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | |||
Current liabilities: | |||
Accounts payable | $ 9,489 | $ 8,627 | 8,314 |
Accrued liabilities | 11,458 | 9,893 | 5,648 |
Current portion of long-term debt | — | — | 7,125 |
Total current liabilities | 20,947 | 18,520 | 21,087 |
Deferred and accrued rents | 19,245 | 14,890 | 11,966 |
Long-term debt | 12,000 | 22,000 | 85,500 |
Total liabilities | 52,192 | 55,410 | 118,553 |
Commitments and contingencies | |||
Stockholders' equity (deficit): | |||
Common stock -- |
436 | 435 | 405 |
Additional paid-in capital | 79,166 | 77,071 | 27,897 |
Accumulated deficit | (51,862) | (60,604) | (79,187) |
Total stockholders' equity (deficit) | 27,740 | 16,902 | (50,885) |
Total liabilities and stockholders' equity (deficit) | $ 79,932 | $ 72,312 | $ 67,668 |
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Unaudited Consolidated Statements of Cash Flows | |||
(In thousands) | |||
Thirteen Weeks Ended | |||
April 28, 2012 |
April 30, 2011 |
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Cash Flows From Operating Activities: | |||
Net income | $ 8,742 | $ 3,918 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation expense | 1,607 | 980 | |
Stock-based compensation expense | 734 | 476 | |
Excess tax benefit from stock-based compensation | (1,014) | (28) | |
Loss on sale of assets | 7 | 9 | |
Amortization of debt issue costs | 73 | 195 | |
Deferred income taxes | (1,352) | 1,675 | |
Changes in assets and liabilities: | |||
Accounts receivable | (3,735) | (1,527) | |
Inventories | (3,162) | (1,512) | |
Prepaid expenses and other assets | (263) | (1,386) | |
Accounts payable | 862 | 2,168 | |
Accrued liabilities | 2,579 | (761) | |
Deferred and accrued rents | 4,355 | 3,743 | |
Net cash provided by operating activities | 9,433 | 7,950 | |
Cash Flows Used by Investing Activities: | |||
Purchase of property and equipment | (6,620) | (6,687) | |
Other | — | 25 | |
Net cash used by investing activities | (6,620) | (6,662) | |
Cash Flows Used by Financing Activities: | |||
Repayments of borrowings under the prior senior secured credit facility | — | (1,188) | |
Repayments of borrowings under the new revolving credit facility | (10,000) | — | |
Proceeds from the exercise of stock options | 348 | 162 | |
Excess tax benefit from stock-based compensation | 1,014 | 28 | |
Net cash used by financing activities | (8,638) | (998) | |
Net increase (decrease) in cash and cash equivalents | (5,825) | 290 | |
Cash and cash equivalents, beginning of year | 14,046 | 12,516 | |
Cash and cash equivalents, end of period | $ 8,221 | $ 12,806 | |
Supplemental Disclosures of Cash Flow Information: | |||
Cash paid for income taxes | $ 210 | $ 232 | |
Interest paid | $ 4,661 | $ 1,874 |
CONTACT:Source: Francesca's CollectionsICR, Inc. Jean Fontana /Joseph Teklits 203-682-8200 jean.fontana@icrinc.com
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