francesca’s® Provides Preliminary Estimated Third Quarter Fiscal Year 2018 Financial Results
The Company is providing preliminary estimated results, or range of results, as boutique traffic declines persisted throughout the third quarter.
- Net sales have decreased 10% to
$95 millionfrom $106 millionin the third quarter last year, reflecting a comparable sales decrease of 14% primarily resulting from traffic declines in the mid-teens.
- A non-cash asset impairment of approximately
$15 millionis expected to be taken in the third quarter. This non-cash asset impairment is primarily associated with long-lived boutique assets and will have a $0.32diluted loss per share impact.
- GAAP loss per share is expected to be between
($0.51) to ($0.49). Excluding the expected non-cash asset impairment (see Non-GAAP Information below), adjusted loss per share is expected to be between ($0.19)and ($0.17).
- Average ending inventory per boutique is expected to be approximately 6% lower as compared to the same prior year period, excluding last year’s
$2.6 millionreserve taken on back-to-school product. Despite the lower than anticipated sales trend, overall inventories remained controlled through improved receipt and inventory management disciplines.
- Cash and cash equivalents of
$11 millionare expected at quarter-end with no borrowings under the Company’s revolving credit facility.
The Company’s near-term priorities are to improve traffic trends through enhanced marketing reach, improve topline revenue trends by driving faster ecommerce growth and continue emphasis on strong expense and cash management. A thorough review of the entire real estate portfolio is ongoing, and the Company expects Fiscal 2019 will have a smaller brick & mortar footprint than the current year. The closures will largely focus on boutiques with lease expirations or kick-out provisions that do not meet our internal hurdle rates together with the recently identified impaired boutiques.
Mr. Lawrence continued, “We have also begun an evaluation of our real estate portfolio. We maintain that our boutiques are a key part of our brand strategy and customer experience, however we need to ensure our locations are optimal for the brand. As part of our real estate review, we plan on closing under-performing boutiques in Fiscal 2019 with the goal of increasing the profitability of our overall fleet. We believe a smaller brick & mortar boutique footprint for the near term coupled with a strong .com presence is the right approach going forward. Overall, we remain committed to driving improved sales and profitability for our business long term and are encouraged by the sequential improvement in our November performance to date. However, we realize that we have a lot of the holiday season still in front of us and we will continue to prudently employ strong inventory management disciplines and careful controls over expense, capital expenditures and our cash position.
The Company will update its fiscal 2018 fourth quarter and full year outlook on its next conference call.
Conference Call Information
The Company plans to hold a conference call to discuss the third quarter fiscal year 2018 results on
In addition, a replay of the call will be available shortly after the conclusion of the call and remain available until
Preliminary Estimated Results
The Company’s announced preliminary estimated results for its fiscal third quarter ended
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 website; our ability to successfully open, refresh and operate and close boutiques each year, as necessary, to ensure an appropriate brick and mortar footprint; our ability to efficiently source, distribute additional merchandise quantities necessary to support our growth; 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 our forward-looking statements, please refer to "Risk Factors" in our Annual Report on Form 10-K for the year ended
This press release includes non-GAAP adjusted diluted earnings per share, a non-GAAP financial measure. The Company believes this non-GAAP financial measure not only provides our 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 our preliminary estimate for diluted loss per share for the third quarter of fiscal year 2018. 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 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 742 boutiques in 47 states and the
Source: Francesca's Holdings Corporation