francesca's® Reports First Quarter Fiscal Year 2014 Financial Results
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First quarter net sales increased 8% to
$85.4 million - First quarter comparable sales decreased 7%
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First quarter diluted earnings per share were
$0.20 - Opened a record 62 new boutiques during the quarter
Commenting on the second quarter and full year 2014 outlook,
FIRST QUARTER RESULTS
Net sales for the thirteen weeks were
Total apparel merchandise sales increased by 12% with increases in fashion tops and separates offsetting weakness in the dress category. Total non-apparel merchandise sales increased 5% with notable weakness in jewelry offset by increases in accessories and gift.
Our boutique sales were impacted by severe winter weather conditions during February causing over 360 full and partial day boutique closings throughout a large number of Southern, Northeast, and Central geographic regions, particularly in the
Gross profit, as a percentage of net sales, decreased to 49.0% compared to 52.4% in the prior year quarter. This decrease was due to 160 basis points of deleveraging of fixed occupancy costs and 180 basis points of lower merchandise margin. The decrease in merchandise margins was primarily due to elevated levels of markdowns and clearance sales compared to the prior year quarter.
Selling, general and administrative expenses increased 19% to
Income from operations was
BALANCE SHEET SUMMARY
Total cash and cash equivalents at quarter end were
We ended the quarter with
We repurchased approximately 0.3 million shares of our common stock during the quarter at a cost of approximately
SECOND QUARTER AND FULL FISCAL YEAR 2014 GUIDANCE
For the second quarter ending
For the full year ending
Capital expenditures for fiscal year 2014 are expected to be in a range of
Conference Call Information
A conference call to discuss first quarter 2014 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 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. 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; our ability to attract a sufficient number of customers to our boutiques or sell sufficient quantities of our merchandise through our direct-to-consumer 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. 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 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 balanced mix of apparel, jewelry, accessories and gifts. Today francesca's® operates 519 boutiques in 46 states and the
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Unaudited Consolidated Statements of Operations | |||||||
Thirteen Weeks Ended | |||||||
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Variance | |||||
In USD |
As a % of Net Sales(1) |
In USD |
As a % of Net Sales(1) |
In USD | % |
Basis Points |
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(In thousands except per share data) | |||||||
Net sales | $ 85,424 | 100.0 % | $78,987 | 100.0 % | $ 6,437 | 8 % | -- |
Cost of goods sold and occupancy costs | 43,592 | 51.0 % | 37,615 | 47.6 % | 5,977 | 16 % | 340 |
Gross profit | 41,832 | 49.0 % | 41,372 | 52.4 % | 460 | 1 % | (340) |
Selling, general and administrative expenses | 27,812 | 32.6 % | 23,351 | 29.6 % | 4,461 | 19 % | 300 |
Income from operations | 14,020 | 16.4 % | 18,021 | 22.8 % | (4,001) | (22)% | (640) |
Interest expense | (221) | (0.3)% | (116) | (0.1)% | (105) | 91 % | (20) |
Other income | 103 | 0.1 % | 83 | 0.1 % | 20 | 24 % | -- |
Income before income tax expense | 13,902 | 16.3 % | 17,988 | 22.8 % | (4,086) | (23)% | (650) |
Income tax expense | 5,342 | 6.3 % | 7,051 | 8.9 % | (1,709) | (24)% | (270) |
Net income | $ 8,560 | 10.0 % | $10,937 | 13.8 % | (2,377) | (22)% | (380) |
(1) Percentage totals or differences in the above table may not equal the sum or difference of the components due to rounding. | |||||||
Diluted earnings (loss) per common share | $ 0.20 | $ 0.24 | |||||
Weighted average diluted shares outstanding: | 42,362 | 44,880 | |||||
Comparable boutique sales increase | (7)% | 2% |
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Unaudited Consolidated Balance Sheets | |||
(In thousands) | |||
2014 |
2014 |
2013 |
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ASSETS | |||
Current assets: | |||
Cash and cash equivalents |
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Accounts receivable | 10,822 | 8,984 | 7,645 |
Inventories | 28,779 | 24,614 | 23,330 |
Deferred income taxes | 4,643 | 4,565 | 3,567 |
Prepaid expenses and other current assets | 6,179 | 6,764 | 4,772 |
Total current assets | 75,836 | 82,425 | 73,077 |
Property and equipment, net | 69,799 | 64,131 | 55,729 |
Deferred income taxes | 3,113 | 2,335 | 2,893 |
Other assets, net | 1,724 | 1,654 | 1,383 |
TOTAL ASSETS |
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LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current liabilities: | |||
Accounts payable |
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Accrued liabilities | 9,640 | 9,823 | 14,010 |
Total current liabilities | 19,398 | 20,030 | 22,633 |
Landlord incentives and deferred rent | 32,333 | 27,448 | 26,151 |
Long-term debt | 15,000 | 25,000 | — |
Total liabilities | 66,731 | 72,478 | 48,784 |
Commitments and contingencies | |||
Stockholders' equity: | |||
Common stock -- 45.4 million, 45.2 million and 44.0 million shares issued at |
454 | 452 | 440 |
Additional paid-in capital | 103,574 | 101,192 | 86,464 |
Retained earnings (accumulated deficit) | 39,856 | 31,296 | (2,606) |
Treasury stock, at cost - 3.2 million, 2.9 million and 0 shares held at |
(60,143) | (54,873) | — |
Total stockholders' equity | 83,741 | 78,067 | 84,298 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
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Unaudited Consolidated Statements of Cash Flows | ||
(In thousands) | ||
Thirteen Weeks Ended | ||
2014 |
2013 |
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Cash Flows From Operating Activities: | ||
Net income |
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Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation expense | 2,982 | 2,237 |
Stock-based compensation expense | 832 | 990 |
Excess tax benefit from stock-based compensation | (581) | (2,373) |
Loss on sale of assets | 17 | 110 |
Amortization of debt issuance costs | 61 | 73 |
Deferred income taxes | (855) | (597) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (1,256) | (5,141) |
Inventories | (4,164) | (4,281) |
Prepaid expenses and other assets | 453 | 93 |
Accounts payable | (1,039) | 265 |
Accrued liabilities | (185) | 5,717 |
Landlord incentive and deferred rent | 4,885 | 4,059 |
Net cash provided by operating activities | 9,710 | 12,089 |
Cash Flows Used in Investing Activities: | ||
Purchase of property and equipment | (8,078) | (8,517) |
Net cash used in investing activities | (8,078) | (8,517) |
Cash Flows Provided by (Used in) Financing Activities: | ||
Repayments of borrowings under the revolving credit facility | (10,000) | -- |
Repurchases of common stock | (5,270) | -- |
Proceeds from the exercise of stock options | 972 | 221 |
Taxes paid related to net settlement of equity awards | -- | (2,280) |
Excess tax benefit from stock-based compensation | 581 | 2,373 |
Net cash provided by (used in) financing activities | (13,717) | 314 |
Net increase (decrease) in cash and cash equivalents | (12,085) | 3,886 |
Cash and cash equivalents, beginning of year | 37,498 | 29,877 |
Cash and cash equivalents, end of period |
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Supplemental Disclosures of Cash Flow Information: | ||
Cash paid for income taxes |
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Interest paid |
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Supplemental Information | ||||
Sales by Merchandise Category | ||||
Thirteen Weeks Ended | Change | |||
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In dollars | % | |
(in thousands, except percentages) | ||||
Apparel |
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12% |
Jewelry | 18,321 | 18,981 | (660) | (3)% |
Accessories | 14,144 | 12,614 | 1,530 | 12% |
Gifts | 8,399 | 7,230 | 1,169 | 16% |
Merchandise sales | 85,628 | 78,674 | 6,954 | 9% |
Other(1) | (204) | 313 | (517) | (165)% |
Net sales |
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8% |
(1) Includes gift card breakage income, shipping and change in return reserve. |
Quarterly Comparable Transactions Results | ||
Transactions(1) | Average Transaction Value(2) | |
Q1 2013 | (7)% | 0% |
(1) The number of comparable transactions (including merchandise and gift card purchases, returns and gift card redemptions) processed through our point-of-sale system for which a receipt was issued. | ||
(2) Average transaction value is calculated by dividing total comparable sales by the number of comparable transactions during the period. |
Quarterly Comparable Sales Results | ||||
FY 2012(1) | FY 2013(2) | FY 2014 | ||
Q1 | 16% | 2% | (7)% | |
(1) Beginning in the first quarter of fiscal year 2013, comparable sales results include our direct-to-consumer sales. To facilitate comparability with the prior year period, prior year comparable sales growth was recalculated and now includes direct-to-consumer sales growth. | ||||
(2) Due to the retail calendar shift, comparable sales results for each of the thirteen weeks ended |
CONTACT:Source:ICR, Inc. Jean Fontana 646-277-1214 CompanyMark Vendetti 832-494-2315 Mark.Vendetti@francescas.com
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