Third Quarter of Fiscal 2014 Highlights:
THIRD QUARTER RESULTS
Net sales for the thirteen weeks ended
Direct-to-consumer sales increased 53% versus the prior year quarter. Year to-date direct-to-consumer sales were up 76% over the comparable period of the prior year primarily due to increased traffic.
Gross profit, as a percentage of net sales, decreased to 47.3% compared to 50.7% in the prior year quarter. This decrease included a 160 basis points decrease in merchandise margin primarily due to increased markdowns and promotional activities. The remaining 180 basis points decline was the result of deleveraging of fixed occupancy costs.
Selling, general and administrative expenses increased 16% to
Our effective tax rate for the third quarter was 35.7% resulting from a true-up of prior year state taxes. Excluding this adjustment, our effective tax rate for the quarter was 37.1%.
Income from operations was
BALANCE SHEET SUMMARY
Total cash and cash equivalents at quarter end were
The Company ended the quarter with
FOURTH QUARTER AND FULL FISCAL YEAR 2014 GUIDANCE
The Company's updated fourth quarter guidance assumes the continuation of a challenging retail environment and aggressive promotional activity throughout the holiday season, in addition to the expectation that our apparel business will remain challenged. As a result, the Company may take more aggressive markdowns in order to clear excess inventory which is expected to lead to approximately 475 to 525 basis points decrease in gross profit margin in the fourth quarter compared to the same period of the prior year. These expectations are incorporated into the Company's fourth quarter guidance.
For the fourth quarter ending
For the full year ending
Capital expenditures for fiscal year 2014 are now expected to be in the range of
Conference Call Information
A conference call to discuss third 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 538 boutiques in 47 states and the
|
|||||||
Unaudited Consolidated Statements of Operations | |||||||
(In Thousands, Except Per Share Amounts and Percentages) | |||||||
Thirteen Weeks Ended | |||||||
|
|
Variance | |||||
In USD |
As a % of Net Sales(1) |
In USD |
As a % of Net Sales(1) |
In USD |
% |
Basis Points |
|
Net sales | $ 87,110 | 100.0% | $ 79,632 | 100.0% | $ 7,478 | 9% | — |
Cost of goods sold and occupancy costs | 45,925 | 52.7% | 39,275 | 49.3% | 6,650 | 17% | 340 |
Gross profit | 41,185 | 47.3% | 40,357 | 50.7% | 828 | 2% | (340) |
Selling, general and administrative expenses | 29,810 | 34.2% | 25,766 | 32.4% | 4,044 | 16% | 180 |
Income from operations | 11,375 | 13.1% | 14,591 | 18.3% | (3,216) | (22)% | (520) |
Interest expense | (117) | (0.1)% | (129) | (0.2)% | 12 | (9)% | 10 |
Other income | 42 | 0.0% | (77) | (0.1)% | 119 | (155)% | 10 |
Income before income tax expense | 11,300 | 13.0% | 14,385 | 18.1% | (3,085) | (21)% | (510) |
Income tax expense | 4,030 | 4.6% | 5,714 | 7.2% | (1,684) | (29)% | (260) |
Net income | $ 7,270 | 8.3% | $ 8,671 | 10.9% | $ (1,401) | (16)% | (260) |
(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 | $ 0.17 | $ 0.20 | |||||
Weighted average diluted share count | 42,389 | 43,993 | |||||
Comparable sales change | (6)% | (3)% | |||||
Thirty Nine Weeks Ended | |||||||
|
|
Variance | |||||
In USD |
As a % of Net Sales |
In USD |
As a % of Net Sales |
In USD |
% |
Basis Points |
|
Net sales | $ 269,853 | 100.0% | $ 248,185 | 100.0% | $ 21,668 | 9% | — |
Cost of goods sold and occupancy costs | 141,521 | 52.4% | 118,700 | 47.8% | 22,821 | 19% | 460 |
Gross profit | 128,332 | 47.6% | 129,485 | 52.2% | (1,153) | (1)% | (460) |
Selling, general and administrative expenses | 86,275 | 32.0% | 72,800 | 29.3% | 13,475 | 19% | 270 |
Income from operations | 42,057 | 15.6% | 56,685 | 22.8% | (14,628) | (26)% | (720) |
Interest expense | (507) | (0.2)% | (362) | (0.1)% | (145) | 40% | (10) |
Other income | 201 | 0.1% | 127 | 0.1% | 74 | 58% | — |
Income before income tax expense | 41,751 | 15.5% | 56,450 | 22.7% | (14,699) | (26)% | (720) |
Income tax expense | 15,614 | 5.8% | 22,223 | 9.0% | (6,609) | (30)% | (320) |
Net income | $ 26,137 | 9.7% | $ 34,227 | 13.8% | $ (8,090) | (24)% | (410) |
(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 | $ 0.62 | $ 0.77 | |||||
Weighted average diluted share count | 42,373 | 44,600 | |||||
Comparable sales change | (7)% | (1)% |
|
|||
Unaudited Consolidated Balance Sheets | |||
(In thousands, except share amounts) | |||
2014 |
2014 |
2013 |
|
ASSETS | |||
Current assets: | |||
Cash and cash equivalents |
|
|
|
Accounts receivable | 9,214 | 8,984 | 9,850 |
Inventories | 35,428 | 24,614 | 30,638 |
Deferred income taxes | 4,797 | 4,565 | 3,688 |
Prepaid expenses and other current assets | 5,699 | 6,764 | 6,222 |
Total current assets | 77,968 | 82,425 | 82,240 |
Property and equipment, net | 70,646 | 64,131 | 57,359 |
Deferred income taxes | 6,573 | 2,335 | 4,046 |
Other assets, net | 2,776 | 1,654 | 2,555 |
TOTAL ASSETS |
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current liabilities: | |||
Accounts payable |
|
|
|
Accrued liabilities | 8,610 | 9,823 | 10,365 |
Total current liabilities | 21,684 | 20,030 | 18,935 |
Landlord incentives and deferred rent | 33,299 | 27,448 | 27,554 |
Long-term debt | — | 25,000 | 25,000 |
Total liabilities | 54,983 | 72,478 | 71,489 |
Commitments and contingencies | |||
Stockholders' equity: | |||
Common stock - |
455 | 452 | 442 |
Additional paid-in capital | 105,235 | 101,192 | 90,511 |
Retained earnings | 57,433 | 31,296 | 20,684 |
Treasury stock, at cost - 3.2 million, 2.9 million and 1.9 million shares held at |
(60,143) | (54,873) | (36,926) |
Total stockholders' equity | 102,980 | 78,067 | 74,711 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
||
Unaudited Consolidated Statements of Cash Flows | ||
(In thousands) | ||
Thirty Nine Weeks Ended | ||
2014 |
2013 |
|
Cash Flows Provided By Operating Activities: | ||
Net income |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation expense | 9,664 | 7,421 |
Stock-based compensation expense | 2,488 | 2,955 |
Excess tax benefit from stock-based compensation | (226) | (3,522) |
Inventory write-off | 2,743 | — |
Loss on sale of assets | 191 | 343 |
Amortization of debt issuance costs | 184 | 216 |
Deferred income taxes | (4,470) | (1,871) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (4) | (3,824) |
Inventories | (13,557) | (11,589) |
Prepaid expenses and other assets | (240) | (2,295) |
Accounts payable | 3,268 | (597) |
Accrued liabilities | (1,213) | (302) |
Landlord incentive and deferred rent | 5,851 | 5,462 |
Net cash provided by operating activities | 30,816 | 26,624 |
Cash Flows Used in Investing Activities: | ||
Purchase of property and equipment | (16,785) | (15,646) |
Proceeds from sale of assets | 13 | 82 |
Net cash used in investing activities | (16,772) | (15,564) |
Cash Flows Used in Financing Activities: | ||
Repayments of borrowings under the revolving credit facility | (25,000) | — |
Proceeds from borrowings under the revolving credit facility | — | 25,000 |
Payments of debt issuance costs | — | (376) |
Repurchases of common stock | (5,270) | (36,117) |
Proceeds from the exercise of stock options | 1,332 | 1,156 |
Taxes paid related to net settlement of equity awards | — | (2,280) |
Excess tax benefit from stock-based compensation | 226 | 3,522 |
Net cash used in financing activities | (28,712) | (9,095) |
Net increase (decrease) in cash and cash equivalents | (14,668) | 1,965 |
Cash and cash equivalents, beginning of year | 37,498 | 29,877 |
Cash and cash equivalents, end of period |
|
|
Supplemental Disclosures of Cash Flow Information: | ||
Cash paid for income taxes |
|
|
Interest paid |
|
|
|
||||
Supplemental Information | ||||
Sales by Merchandise Category | ||||
Thirteen Weeks Ended | Variance | |||
|
|
In Dollars | % | |
(in thousands, except percentages) | ||||
Apparel |
|
|
|
6% |
Jewelry | 18,638 | 17,335 | 1,303 | 8% |
Accessories | 14,220 | 13,771 | 449 | 3% |
Gifts | 9,606 | 6,540 | 3,066 | 47% |
Merchandise Sales | 86,738 | 79,250 | 7,488 | 9% |
Others(1) | 372 | 382 | (10) | (3)% |
Net sales |
|
|
|
9% |
(1) Includes gift card breakage income, shipping and change in return reserve. |
Quarterly Comparable Transactions Results | ||
FY 2014 | ||
Transactions (1) |
Average Transaction Value (2) |
|
Q1 | (7)% | 0% |
Q2 | (7)% | 0% |
Q3 | (6)% | 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 |
|||
FY 2012(1) | FY 2013(2) | FY 2014 | |
Q1 | 16% | 2 % | (7)% |
Q2 | 21% | (1)% | (7)% |
Q3 | 17% | (6)% | (6)% |
(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 results was recalculated and now includes direct-to-consumer sales results. | |||
(2) The 53rd week in fiscal 2012 caused a one-week shift in our 2013 fiscal calendar, resulting in the first quarter of fiscal year 2013 being later by one week relative to the quarter-ending date in fiscal year 2012 ("retail calendar shift"). Our reported comparable sales results for fiscal 2012 were adjusted for this retail calendar shift. |
CONTACT:Source:ICR, Inc. Jean Fontana 646-277-1214 CompanyMark Vendetti 832-494-2315 Mark.Vendetti@francescas.com
News Provided by Acquire Media