francesca's® Reports Second Quarter Fiscal Year 2015 Financial Results
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Net sales increased 9% to
$106.0 million - Comparable sales decreased 4%
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Diluted earnings per share was
$0.22 - Opened 69 boutiques year-to-date
SECOND QUARTER RESULTS
Net sales increased 9% to
Comparable sales decreased 4% due to lower comparable transactions. DTC sales were flat at
Gross profit, as a percentage of net sales, increased to 47.4% from 46.6% in the prior year quarter. This increase is driven by 260 basis points improvement in merchandise margin partially offset by 170 basis points deleveraging of occupancy costs. The merchandise margin improvement is attributable to the decreased amount of charges related to the disposal of slow-moving merchandise as well as lower promotions compared to last year.
Selling, general and administrative expenses ("SG&A") increased 23% to
Income from operations was
BALANCE SHEET SUMMARY
Total cash and cash equivalents at the end of the quarter were
We ended the quarter with
THIRD QUARTER AND FISCAL YEAR 2015 GUIDANCE
For the third quarter ending
For the full year ending
Our expected capital expenditures for fiscal year 2015 have decreased to approximately
Conference Call Information
A conference call to discuss the second quarter fiscal year 2015 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; 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; our ability to efficiently source and distribute
additional merchandise quantities necessary to support our growth; and our ability to attract and integrate a new Chief Merchandising Officer. 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 with retail locations designed and merchandised to feel like unique, 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 612 boutiques in 47 states and the
Consolidated Statements of Operations
(In Thousands, Except Per Share Amounts and Percentages)
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 |
|
Net sales | $ 106,033 | 100.0 % |
|
100.0 % |
|
9% | -- |
Cost of goods sold and occupancy costs | 55,725 | 52.6 % | 52,004 | 53.4 % | 3,721 | 7% | (90) |
Gross profit | 50,308 | 47.4 % | 45,315 | 46.6 % | 4,993 | 11% | 90 |
Selling, general and administrative expenses | 35,133 | 33.1 % | 28,653 | 29.4 % | 6,480 | 23% | 370 |
Income from operations | 15,175 | 14.3 % | 16,662 | 17.1 % | (1,487) | (9)% | (280) |
Interest expense | (112) | (0.1)% | (169) | (0.2)% | 57 | (34)% | 10 |
Other (expense) income | (54) | (0.1)% | 56 | 0.1 % | (110) | (196)% | (20) |
Income before income tax expense | 15,009 | 14.2 % | 16,549 | 17.0 % | (1,540) | (9)% | (280) |
Income tax expense | 5,705 | 5.4 % | 6,242 | 6.4 % | (537) | (9)% | (100) |
Net income |
|
8.8 % |
|
10.6 % |
|
(10)% | (180) |
(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 |
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|
|||||
Weighted average diluted share count | 42,433 | 42,367 | |||||
Comparable sales change | (4)% | (7)% | |||||
Twenty Six 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 |
|
Net sales |
|
100.0% |
|
100.0% |
|
10% | -- |
Cost of goods sold and occupancy costs | 105,843 | 52.6% | 95,596 | 52.3% | 10,247 | 11% | 30 |
Gross profit | 95,201 | 47.4% | 87,147 | 47.7% | 8,054 | 9% | (30) |
Selling, general and administrative expenses | 68,136 | 33.9% | 56,465 | 30.9% | 11,671 | 21% | 300 |
Income from operations | 27,065 | 13.5% | 30,682 | 16.8% | (3,617) | (12)% | (330) |
Interest expense | (222) | (0.1)% | (390) | (0.2)% | 168 | (43)% | 10 |
Other (expense) income | (120) | (0.1)% | 159 | 0.1% | (279) | (175)% | (20) |
Income before income tax expense | 26,723 | 13.3% | 30,451 | 16.7% | (3,728) | (12)% | (340) |
Income tax expense | 10,178 | 5.1% | 11,584 | 6.3% | (1,406) | (12)% | (130) |
Net income |
|
8.2% |
|
10.3% | $ (2,322) | (12)% | (210) |
(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 |
|
|
|||||
Weighted average diluted share count | 42,425 | 42,364 | |||||
Comparable sales change | (3)% | (7)% |
Consolidated Balance Sheets
(In thousands, except share amounts)
2015 |
|
2014 |
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ASSETS | |||
Current assets: | |||
Cash and cash equivalents |
|
|
|
Accounts receivable | 9,061 | 12,279 | 9,905 |
Inventories | 33,642 | 23,801 | 30,191 |
Deferred income taxes | 5,537 | 4,858 | 4,726 |
Prepaid expenses and other current assets | 5,915 | 5,890 | 6,965 |
Total current assets | 102,995 | 85,899 | 76,648 |
Property and equipment, net | 80,176 | 74,095 | 71,217 |
Deferred income taxes | 5,426 | 3,642 | 4,562 |
Other assets, net | 1,677 | 1,909 | 1,538 |
TOTAL ASSETS |
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LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current liabilities: | |||
Accounts payable |
|
|
|
Accrued liabilities | 13,465 | 11,904 | 9,088 |
Total current liabilities | 26,766 | 23,454 | 20,468 |
Landlord incentives and deferred rent | 37,404 | 32,877 | 33,097 |
Long-term debt | -- | -- | 5,000 |
Total liabilities | 64,170 | 56,331 | 58,565 |
Commitments and contingencies | |||
Stockholders' equity: | |||
Common stock -- |
455 | 455 | 455 |
Additional paid-in capital | 105,843 | 105,498 | 104,925 |
Retained earnings | 79,949 | 63,404 | 50,163 |
Treasury stock, at cost - 3.2 million shares at each |
(60,143) | (60,143) | (60,143) |
Total stockholders' equity | 126,104 | 109,214 | 95,400 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
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Consolidated Statements of Cash Flows
(In thousands)
Twenty Six Weeks Ended | ||
2015 |
2014 |
|
Cash Flows From Operating Activities: | ||
Net income |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 8,000 | 6,366 |
Stock-based compensation expense | 1,591 | 1,629 |
Excess tax benefit from stock-based compensation | (61) | (775) |
Loss on sale of assets | 282 | 121 |
Deferred income taxes | (3,940) | (2,388) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 3,279 | (146) |
Inventories | (9,841) | (5,577) |
Prepaid expenses and other assets | 86 | (208) |
Accounts payable | 2,466 | 1,480 |
Accrued liabilities | 1,561 | (735) |
Landlord incentives and deferred rent | 4,527 | 5,649 |
Net cash provided by operating activities | 24,495 | 24,283 |
Cash Flows From Investing Activities: | ||
Purchases of property and equipment | (14,959) | (13,759) |
Proceeds from sale of assets | 3 | 2 |
Net cash used in investing activities | (14,956) | (13,757) |
Cash Flows From Financing Activities: | ||
Proceeds from the exercise of stock options | 169 | 1,332 |
Excess tax benefit from stock-based compensation | 61 | 775 |
Repayments of borrowings under the revolving credit facility | -- | (20,000) |
Repurchases of common stock | -- | (5,270) |
Net cash provided by (used in) financing activities | 230 | (23,163) |
Net increase (decrease) in cash and cash equivalents | 9,769 | (12,637) |
Cash and cash equivalents, beginning of year | 39,071 | 37,498 |
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
Quarterly Sales by Merchandise Category
Thirteen Weeks Ended | Change | |||
|
August2,2014 | Dollar | % | |
(in thousands, except percentages) | ||||
Apparel |
|
|
|
8% |
Jewelry | 23,442 | 20,594 | 2,848 | 14% |
Accessories | 14,537 | 14,526 | 11 | 0% |
Gifts | 11,069 | 9,865 | 1,204 | 12% |
Merchandise sales | 105,489 | 97,113 | 8,376 | 9% |
Others(1) | 544 | 206 | 338 | 164% |
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|
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9% | |
(1) Includes gift card breakage income, shipping and change in return reserve. |
Quarterly Comparable Transactions Results for Fiscal Year 2015
Transactions(1) | Average Transaction Value(2) | ||
Q1 | (5)% | 3% | |
Q2 | (3)% | (1)% | |
(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. |
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(2) Average transaction value is calculated by dividing total comparable sales by the number of comparable transactions during the period. |
Quarterly Comparable Sales
FY 2013 | FY 2014 | FY 2015 | |
Q1 | 2 % | (7)% | (2)% |
Q2 | (1)% | (7)% | (4)% |
Q3 | (3)% | (6)% | |
Q4 | (6)% | 1 % | |
Fiscal year | (2)% | (5)% |
CONTACT:Source:ICR, Inc. Jean Fontana 646-277-1214 CompanyMark Vendetti 832-494-2315 Mark.Vendetti@francescas.com / IR@francescas.com
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