francesca's® Exceeds Previous Guidance with Full Year EPS of $1.09, a 20% Increase Versus the Prior Year
- Fourth quarter net sales increase 9% to
$146.3 million - Fourth quarter diluted earnings per share were
$0.39 , an 11% increase versus the prior year
FOURTH QUARTER RESULTS
Net sales increased 9% to
Gross profit, as a percent of net sales, decreased to 46.4% from 49.1% in the prior year quarter. This unfavorable variance was principally due to the Company's strategic move to take accelerated markdowns in January, which included marking some merchandise out-of-stock at the end of the year, in order to enter fiscal year 2017 with clean inventories.
Selling, general and administrative expenses increased 6% to
Income from operations was
Net income for the fourth quarter was
FULL YEAR RESULTS
Net sales increased 11% to
During fiscal year 2016, the Company opened 64 new boutiques and closed nine boutiques compared to 83 new boutiques opened and six boutiques closed in fiscal year 2015.
Net income for fiscal year 2016 totaled
BALANCE SHEET SUMMARY
Total cash and cash equivalents at the end of the quarter were
The Company ended the quarter with
FIRST QUARTER AND FISCAL YEAR 2017 GUIDANCE
For the first quarter ending
For the fiscal year
ending
Capital expenditures for fiscal year 2017 are expected to be in the range of
Conference Call Information
A conference call to discuss the fourth quarter and fiscal year 2016 results is scheduled for
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, as amended. Such forward-looking statements reflect our 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. These risks and uncertainties include, but are not limited to, the following: the risk that we 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 our business model; our ability to attract a sufficient number of customers to our boutiques or sell sufficient quantities of our merchandise through our ecommerce business; our ability to successfully open and operate new boutiques each year; and our ability to efficiently source and distribute additional merchandise quantities necessary to support our growth. For additional information regarding 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 for the year ended
About
francesca's® is a growing 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 671 boutiques in 48 states and the
Francesca's | |||||||||||||||||||||||
Consolidated Statements of Operations | |||||||||||||||||||||||
(In Thousands, Except Per Share Amounts, Percentages and Basis Points) | |||||||||||||||||||||||
Thirteen Weeks Ended | |||||||||||||||||||||||
Variance | |||||||||||||||||||||||
In USD | As a % of | In USD | As a % of | In USD | % | Basis Points | |||||||||||||||||
Net sales | $ | 146,345 | 100.0 | % | $ | 134,605 | 100.0 | % | $ | 11,740 | 9 | % | - | ||||||||||
Cost of goods sold and occupancy costs | 78,412 | 53.6 | % | 68,468 | 50.9 | % | 9,944 | 15 | % | 270 | |||||||||||||
Gross profit | 67,933 | 46.4 | % | 66,137 | 49.1 | % | 1,796 | 3 | % | (270 | ) | ||||||||||||
Selling, general and administrative expenses | 44,349 | 30.3 | % | 41,965 | 31.2 | % | 2,384 | 6 | % | (90 | ) | ||||||||||||
Income from operations | 23,584 | 16.1 | % | 24,172 | 18.0 | % | (588 | ) | (2 | )% | (190 | ) | |||||||||||
Interest expense | (111 | ) | (0.1 | )% | (113 | ) | (0.1 | )% | 2 | (2 | )% | - | |||||||||||
Other income (expense) | 29 | 0.0 | % | (60 | ) | 0.0 | % | 89 | 148 | % | - | ||||||||||||
Income before income tax expense | 23,502 | 16.1 | % | 23,999 | 17.8 | % | (497 | ) | (2 | )% | (170 | ) | |||||||||||
Income tax expense | 8,867 | 6.1 | % | 9,343 | 6.9 | % | (476 | ) | (5 | )% | (80 | ) | |||||||||||
Net income | $ | 14,635 | 10.0 | % | $ | 14,656 | 10.9 | % | $ | (21 | ) | 0 | % | (90 | ) | ||||||||
(1) Percentage totals or differences in the above table may not equal the sum or difference of the components due to rounding. | |||||||||||||||||||||||
Diluted earnings per share | $ | 0.39 | $ | 0.35 | |||||||||||||||||||
Weighted average diluted share count | 37,383 | 41,391 | |||||||||||||||||||||
Comparable sales change | 0 | % | 11 | % | |||||||||||||||||||
Fiscal Year Ended | |||||||||||||||||||||||
Variance | |||||||||||||||||||||||
In USD | As a % of | In USD | As a % of | In USD | % | Basis Points | |||||||||||||||||
Net sales | $ | 487,188 | 100.0 | % | $ | 439,377 | 100.0 | % | $ | 47,811 | 11 | % | - | ||||||||||
Cost of goods sold and occupancy costs | 258,561 | 53.1 | % | 229,673 | 52.3 | % | 28,888 | 13 | % | 80 | |||||||||||||
Gross profit | 228,627 | 46.9 | % | 209,704 | 47.7 | % | 18,923 | 9 | % | (80 | ) | ||||||||||||
Selling, general and administrative expenses | 160,702 | 33.0 | % | 147,387 | 33.5 | % | 13,315 | 9 | % | (50 | ) | ||||||||||||
Income from operations | 67,925 | 13.9 | % | 62,317 | 14.2 | % | 5,608 | 9 | % | (30 | ) | ||||||||||||
Interest expense | (464 | ) | (0.1 | )% | (457 | ) | (0.1 | )% | (7 | ) | (2 | )% | - | ||||||||||
Other income (expense) | 147 | 0.0 | % | (151 | ) | 0.0 | % | 298 | 197 | % | - | ||||||||||||
Income before income tax expense | 67,608 | 13.9 | % | 61,709 | 14.0 | % | 5,899 | 10 | % | (10 | ) | ||||||||||||
Income tax expense | 25,607 | 5.3 | % | 23,557 | 5.4 | % | 2,050 | 9 | % | (10 | ) | ||||||||||||
Net income | $ | 42,001 | 8.6 | % | $ | 38,152 | 8.7 | % | $ | 3,849 | 10 | % | (10 | ) | |||||||||
(1) Percentage totals or differences in the above table may not equal the sum or difference of the components due to rounding. | |||||||||||||||||||||||
Diluted earnings per share | $ | 1.09 | $ | 0.91 | |||||||||||||||||||
Weighted average diluted share count | 38,551 | 42,117 | |||||||||||||||||||||
Comparable sales change | 2 | % | 3 | % |
Francesca's | ||||||||
Consolidated Balance Sheets | ||||||||
(In thousands, except share and per share amounts) | ||||||||
2017 | 2016 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 53,202 | $ | 56,224 | ||||
Accounts receivable | 5,605 | 9,580 | ||||||
Inventories | 23,958 | 31,541 | ||||||
Deferred income taxes | 8,487 | 6,411 | ||||||
Prepaid expenses and other current assets | 8,823 | 7,013 | ||||||
Total current assets | 100,075 | 110,769 | ||||||
Property and equipment, net | 80,484 | 77,894 | ||||||
Deferred income taxes | 6,978 | 3,847 | ||||||
Other assets, net | 2,056 | 1,067 | ||||||
TOTAL ASSETS | $ | 189,593 | $ | 193,577 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 9,205 | $ | 14,305 | ||||
Accrued liabilities | 25,761 | 16,328 | ||||||
Total current liabilities | 34,966 | 30,633 | ||||||
Landlord incentives and deferred rent | 38,092 | 36,552 | ||||||
Total liabilities | 73,058 | 67,185 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity: | ||||||||
Common stock-$.01 par value, 80.0 million shares authorized, 46.1 million and 45.9 million shares issued as of | 461 | 459 | ||||||
Additional paid-in capital | 109,008 | 107,693 | ||||||
Retained earnings | 143,557 | 101,556 | ||||||
(136,491 | ) | (83,316 | ) | |||||
Total stockholders' equity | 116,535 | 126,392 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 189,593 | $ | 193,577 |
Francesca's | |||||||||||||
Consolidated Statements of Cash Flows | |||||||||||||
(In thousands) | |||||||||||||
Fiscal Year Ended | |||||||||||||
2017 | 2016 | 2015 | |||||||||||
Cash Flows Provided by Operating Activities: | |||||||||||||
Net income | $ | 42,001 | $ | 38,152 | $ | 32,108 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||
Depreciation and amortization | 19,337 | 16,816 | 13,151 | ||||||||||
Stock-based compensation expense | 1,016 | 2,932 | 2,668 | ||||||||||
Excess tax benefit from stock-based compensation | (34 | ) | (236 | ) | (309 | ) | |||||||
Impairment charges | 141 | 790 | 2,470 | ||||||||||
Loss on disposal of assets | 407 | 487 | 364 | ||||||||||
Amortization of debt issuance costs | 245 | 245 | 245 | ||||||||||
Deferred income taxes | (5,411 | ) | (3,226 | ) | (1,600 | ) | |||||||
Changes in assets and liabilities: | |||||||||||||
Accounts receivable | 3,975 | 2,935 | (2,986 | ) | |||||||||
Inventories | 7,583 | (7,740 | ) | 813 | |||||||||
Prepaid expenses and other assets | (3,160 | ) | (524 | ) | 373 | ||||||||
Accounts payable | (4,936 | ) | 4,137 | (363 | ) | ||||||||
Accrued liabilities | 9,467 | 4,424 | 2,081 | ||||||||||
Landlord incentives and deferred rent | 1,540 | 3,675 | 5,429 | ||||||||||
Net cash provided by operating activities | 72,171 | 62,867 | 54,444 | ||||||||||
Cash Flows Used in Investing Activities: | |||||||||||||
Purchase of property and equipment | (21,852 | ) | (24,276 | ) | (24,255 | ) | |||||||
Other | 8 | 12 | 13 | ||||||||||
Net cash used in investing activities | (21,844 | ) | (24,264 | ) | (24,242 | ) | |||||||
Cash Flows Used in Financing Activities: | |||||||||||||
Repurchases of common stock | (53,853 | ) | (22,185 | ) | (5,270 | ) | |||||||
Proceeds from the exercise of stock options | 512 | 499 | 1,332 | ||||||||||
Excess tax benefit from stock-based compensation | 34 | 236 | 309 | ||||||||||
Taxes paid related to net settlement of equity awards | (42 | ) | - | - | |||||||||
Repayment of borrowings under the revolving credit facility | - | - | (25,000 | ) | |||||||||
Net cash used in financing activities | (53,349 | ) | (21,450 | ) | (28,629 | ) | |||||||
Net increase in cash and cash equivalents | (3,022 | ) | 17,153 | 1,573 | |||||||||
Cash and cash equivalents, beginning of year | 56,224 | 39,071 | 37,498 | ||||||||||
Cash and cash equivalents, end of year | $ | 53,202 | $ | 56,224 | $ | 39,071 | |||||||
Supplemental Disclosures of Cash Flow Information: | |||||||||||||
Cash paid for income taxes | $ | 19,324 | $ | 23,958 | $ | 24,088 | |||||||
Interest paid | $ | 192 | $ | 190 | $ | 388 |
Francesca's
Supplemental Information
Quarterly Sales by Merchandise Category | ||||||||||||||||||
Thirteen Weeks Ended | ||||||||||||||||||
Variance | ||||||||||||||||||
In USD | As a % of Sales | In USD | As a % of Sales | In Dollars | % | |||||||||||||
(in thousands, except percentages) | ||||||||||||||||||
Apparel | $ | 60,677 | 41.5 | % | $ | 53,434 | 39.7 | % | $ | 7,243 | 14 | % | ||||||
Jewelry | 34,069 | 23.3 | % | 29,658 | 22.0 | % | 4,411 | 15 | % | |||||||||
Accessories | 24,865 | 17.0 | % | 24,283 | 18.0 | % | 582 | 2 | % | |||||||||
Gifts | 25,834 | 17.6 | % | 26,615 | 19.8 | % | (781 | ) | (3 | )% | ||||||||
Merchandise sales | 145,445 | 99.4 | % | 133,990 | 99.5 | % | 11,455 | 9 | % | |||||||||
Others(1) | 900 | 0.6 | % | 615 | 0.5 | % | 285 | 46 | % | |||||||||
Net sales | $ | 146,345 | 100.0 | % | $ | 134,605 | 100.0 | % | $ | 11,740 | 9 | % | ||||||
(1) Includes gift card breakage income, shipping and change in return reserve. |
Quarterly Comparable Sales | ||||||||
FY 2016 | FY 2015 | FY 2014 | ||||||
Q1 | 2 | % | (2 | )% | (7 | )% | ||
Q2 | 0 | % | (4 | )% | (7 | )% | ||
Q3 | 7 | % | 4 | % | (6 | )% | ||
Q4 | 0 | % | 11 | % | 1 | % | ||
Fiscal year | 2 | % | 3 | % | (5 | )% |
Boutique Count | |||||
Fiscal Year Ended | Fiscal Year Ended | Fiscal Year Ended | |||
Number of boutiques open at the beginning of period | 616 | 539 | 451 | ||
Boutiques opened | 64 | 83 | 88 | ||
Boutiques closed | (9 | ) | (6 | ) | - |
Number of boutiques open at the end of period | 671 | 616 | 539 |
CONTACT:Source:ICR, Inc. Jean Fontana 646-277-1214 CompanyKelly Dilts 832-494-2236Kate Venturina 832-494-2233 IR@francescas.com
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