Francesca’s Holdings Corporation (Nasdaq: FRAN) today reported
financial results for the fourth quarter and fiscal year ended
February 2, 2019.
Michael Prendergast, Interim CEO, stated, “While sales for the
fourth quarter were in-line with our expectations, adjusted diluted
loss per share was better than anticipated reflecting some of the
early work that has been done around expense management. Over
the last three months we have done an abundance of work, evaluating
all areas of the business and developing a strategic turnaround
plan that we believe will return the company to longer-term
positive sales, cash flow and operating income performance.
Our first priority in fiscal 2019 is to transition the
merchandising process to enable the successful execution of a
demand based, fast fashion business model. We are also simplifying
our promotional strategy to more clearly communicate value to our
customer. To date, we have identified $15.0 million in
annualized gross SG&A savings, before costs associated with
achieving those savings. In addition, we are taking steps to
optimize our real estate, through selective boutique closures and
lease renegotiations, and focusing on additional cost
reductions. Looking ahead, we will continue to move swiftly
to develop a strong foundation and implement operational
disciplines that will enable improved performance across all
financial metrics.’’
FOURTH QUARTER RESULTS
Net sales decreased 14% to $119.3 million from $138.5 million in
the comparable prior year quarter. The fourth quarter of
fiscal year 2017 included approximately $5.0 million of sales for
the 53rd week. The net sales decline in the fourth quarter of 2018
reflects a 14% decrease in comparable sales due to a decline in
boutique traffic and a lower conversion rate. The Company opened
one new boutique and closed 12 boutiques during the fourth quarter,
bringing the total boutique count to 727 at the end of the
quarter.
Gross profit, as a percent of net sales, decreased to 39.3% from
43.9% in the prior year quarter. This unfavorable variance
was principally due to 320 basis points deleveraging of occupancy
costs as a result of lower sales, as well as an increase in
occupancy costs. The increase in occupancy costs was the
result of a higher boutique count and an increase in average rent
and related expenses driven by increased penetration of boutiques
in high traffic centers. Additionally, merchandise margins were
lower by 150 basis points due to increased markdowns and average
unit cost partially offset by lower marked-out-of-stock charges and
inventory reserves.
Selling, general and administrative (SG&A) expenses
decreased 4% to $48.1 million from $50.3 million in the prior year
quarter. Adjusted SG&A was $47.4 million and excludes $1.4
million of professional fees associated with the Company’s review
of strategic and financial alternatives and the turnaround plan
that commenced in January 2019 and $0.8 million of stock-based
compensation reversal associated with the resignation of the
Company’s former Chief Executive Officer in February 2019. The
decrease in adjusted SG&A versus the comparable prior year
period was due to a $3.1 million decrease in payroll and related
expenses as a result of labor efficiencies gained at the boutique
level, lower accrued severance and additional payroll expenses for
the 53rd week of fiscal year 2017.
During the fourth quarter, the Company recognized $5.6 million
of non-cash asset impairment charges. Of the total amount,
$2.7 million was associated with the impairment of boutique assets
for 24 underperforming boutiques for which the remaining, or a
portion of the remaining, net book value of their assets are no
longer expected to be recoverable. The remaining $2.9 million
was related to the write-off of boutique furniture, fixtures and
supplies that are no longer intended to be used as a result of the
Company postponing new boutique openings and remodels in future
periods.
Loss from operations was $6.8 million compared to income from
operations of $10.4 million in the prior year quarter.
Excluding the professional fees, reversal of stock-based
compensation and asset impairment charges, adjusted loss from
operations was $0.6 million.
Income tax expense for the fourth quarter of fiscal year 2018
included a non-cash charge of $17.1 million associated with the
valuation allowance provided on the Company’s net deferred tax
assets resulting in an effective tax rate of 212.1%. This
valuation allowance was recorded in fiscal year 2018 because it was
concluded that it is more likely than not that certain deferred tax
assets will not be realized. Income tax expense in the fourth
quarter of fiscal year 2017 included a non-cash charge of $3.3
million in connection with the remeasurement of the Company’s net
deferred tax assets using the lower federal corporate income tax
rate under the Tax Cuts and Jobs Act resulting in an effective tax
rate of 63.9%. Excluding the valuation allowance and remeasurement
of net deferred tax assets, the adjusted effective tax rate in the
fourth quarter of fiscal year 2018 was 38.8% compared to 31.5% in
the comparable prior year quarter.
Net loss for the fourth quarter was $21.3 million, or $0.61
diluted loss per share, compared to prior year quarter net income
of $3.7 million, or $0.10 diluted earnings per share. Adjusted net
loss for the fourth quarter was $0.4 million, or $0.01 adjusted
diluted loss per share compared to adjusted net income of $7.1
million, or $0.20 adjusted diluted earnings per share, in the
comparable prior year quarter.
Please see the reconciliation of adjusted SG&A, adjusted
loss from operations, adjusted effective tax rate, adjusted net
loss and adjusted diluted loss per share, each a non-GAAP financial
measure, to the most directly comparable GAAP financial measure
provided in the tables at the end of this press release.
FULL YEAR RESULTS
Net sales decreased 9% to $428.1 million from $471.7 million in
the prior year. This decrease was due to a 14% decrease in
comparable sales compared to an 11% decrease in the prior year due
to the declines in both boutique traffic and conversion rate.
Additionally, fiscal year 2017 included approximately $5.0 million
of sales for the 53rd week.
During fiscal year 2018, the Company opened 32 new boutiques and
closed 26 boutiques compared to 60 new boutiques opened and 10
boutiques closed during fiscal year 2017.
The Company recognized $20.1 million of non-cash asset
impairment charges primarily associated with the impairment of
boutique assets for 153 underperforming boutiques for which the
remaining, or a portion of the remaining, net book value of their
assets are no longer expected to be recoverable.
The Company recognized $17.1 million of valuation allowance on
the Company’s net deferred tax assets.
Net loss for fiscal year 2018 totaled $40.9 million, or $1.18
diluted loss per share, compared to net income of $15.6 million, or
$0.43 diluted earnings per share, in the prior year. Adjusted net
loss for fiscal year 2018 was $9.0 million, or $0.26 adjusted
diluted loss per share compared to adjusted net income of $18.9
million, or $0.52 adjusted diluted earnings per share for fiscal
year 2017.
Please see the reconciliation of adjusted net loss and adjusted
diluted loss per share, each a non-GAAP financial measure, to the
most directly comparable GAAP financial measure provided in the
tables at the end of this press release.
BALANCE SHEET SUMMARY
Total cash and cash equivalents at the end of the year were
$20.1 million compared to $31.3 million at the end of the
comparable prior year. The Company had $10.0 million
outstanding borrowings under its asset based revolving credit
facility at the end of the fiscal 2018 and, as disclosed in a
previous release, borrowed an additional $5.0 million during the
first quarter of fiscal 2019. The Company had no debt at the
end fiscal 2017. The Company estimates that, as of May 2,
2019, estimated cash and cash equivalents were approximately $13.0
million. Included in the cash balance estimate is an income tax
refund of $8.5 million received on April 22, 2019.
Additionally, the estimated cash balance reflects a $5
million payment on the Asset Based Revolving Credit Facility
bringing the outstanding balance back down to $10.0 million with an
estimated $14.6 million in additional availability.
The Company ended the quarter with $30.5 million of inventory on
hand compared to $26.8 million at the end of the comparable prior
year period. Excluding $3.7 million of inventory reserve for
product that was eventually marked out of stock, average ending
inventory per boutique was flat versus the prior year
period.
Conference Call Information
A conference call to discuss the fourth quarter and fiscal year
2018 results is scheduled for May 3, 2019 at 8:30 a.m. ET. A live
webcast of the conference call will be available in the investor
relations section of the Company’s website, www.francescas.com. A
replay of the call will be available after the conclusion of the
call and remain available until May 10, 2019. To access the
telephone replay, listeners should dial 1-844-512-2921. The access
code for the replay is 13690615. A replay of the web cast will also
be available shortly after the conclusion of the call and will
remain on the website for ninety days.
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 are expected. These risks and
uncertainties include, but are not limited to, the following: the
risk that the Company does not realize the anticipated benefits of
its turnaround plan and the Company experiences unanticipated costs
related to the plan; the risk that the Company’s previously
disclosed exploration of strategic and financial alternatives may
not result in any transaction or alternative that enhances value;
the risk that the Company may not be able to successfully integrate
its Interim Chief Executive Officer and attract and integrate a new
Chief Executive Officer; the risk that the Company 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 its business model; the Company’s
merchandise planning and buying policies and processes do not lead
to merchandise offerings that resonate with customers; the
Company’s ability to attract a sufficient number of customers to
the Company’s boutiques or sell sufficient quantities of its
merchandise through its ecommerce website; the Company’s ability to
successfully open, close, refresh and operate boutiques each year,
as necessary, to ensure an appropriate brick and mortar footprint;
the Company is unable to reduce its real estate lease cost
structure or increase boutique productivity; the Company’s ability
to efficiently source and distribute merchandise quantities
necessary to support its business needs; 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 the Company’s forward-looking statements, please refer
to "Risk Factors" in the Company’s Annual Report on Form 10-K for
the year ended February 3, 2018 filed with the Securities and
Exchange Commission (“SEC”) on March 28, 2018 and any risk factors
contained in subsequent quarterly and annual reports it files with
the SEC. The Company undertakes no obligation to publicly update or
revise any forward-looking statement. Additionally, the Company may
not issue future press releases discussing guidance or financial
results such as this one other than associated with routine
quarterly and annual financial reporting.
Non-GAAP Information
This press release includes non-GAAP adjusted SG&A, adjusted
(loss) income from operations, adjusted net income, adjusted income
tax expense, adjusted effective tax rate, and adjusted diluted
(loss) earnings per share, each of which are non-GAAP financial
measures. The Company believes these non-GAAP financial measures
not only provides the Company’s management with comparable
financial data for internal financial analysis but also provides
meaningful supplemental information to investors. Specifically,
these non-GAAP financial measures allow investors to better
understand the performance of the business and facilitate a
meaningful evaluation of the Company’s fourth quarter and fiscal
year 2018 SG&A, (loss) income from operations, net income and
diluted (loss) earnings per share, adjusted income tax expense and
effective tax rate on a comparable basis with the Company’s fourth
quarter and fiscal year 2017 results. These non-GAAP measures
should be considered a supplement to, and not as a substitute for
or superior to, financial measures calculated in accordance with
GAAP.
About Francesca's Holdings Corporation
francesca's® is a 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. As of February 2, 2019, francesca's® operates approximately
727 boutiques in 47 states and the District of Columbia and also
serves its customers through francescas.com. For additional
information on francesca's®, please visit
www.francescas.com.
CONTACT:ICR, Inc.
Jean Fontana
646-277-1214
CompanyKelly Dilts 832-494-2236Kate Venturina
832-494-2233IR@francescas.com
Francesca’s Holdings
CorporationConsolidated Statements of
Operations(In Thousands, Except Per Share Amounts,
Percentages and Basis Points)
|
Thirteen Weeks Ended |
|
|
|
|
|
|
|
|
February 2, 2019 |
|
February 3, 2018 |
|
Variance |
|
|
In USD |
|
As a %of NetSales(1) |
|
In USD |
|
As a %of NetSales(1) |
|
In USD |
|
% |
|
BasisPoints |
|
Net sales |
$ |
119,310 |
|
|
100.0 |
% |
|
$ |
138,491 |
|
|
100.0 |
% |
|
$ |
(19,181 |
) |
|
(14 |
)% |
|
- |
|
|
Cost of goods sold and
occupancy costs |
|
72,429 |
|
|
60.7 |
% |
|
|
77,666 |
|
|
56.1 |
% |
|
|
(5,237 |
) |
|
(7 |
)% |
|
460 |
|
|
Gross profit |
|
46,881 |
|
|
39.3 |
% |
|
|
60,825 |
|
|
43.9 |
% |
|
|
(13,944 |
) |
|
(23 |
)% |
|
(460 |
) |
|
Selling, general and
administrative expenses |
|
48,081 |
|
|
40.3 |
% |
|
|
50,305 |
|
|
36.3 |
% |
|
|
(2,224 |
) |
|
(4 |
)% |
|
400 |
|
|
Asset impairment
charges |
|
5,555 |
|
|
4.7 |
% |
|
|
158 |
|
|
0.1 |
% |
|
|
5,397 |
|
|
|
* |
(2) |
* |
|
(2) |
(Loss) income from
operations |
|
(6,755 |
) |
|
(5.7 |
)% |
|
|
10,362 |
|
|
7.5 |
% |
|
|
(17,117 |
) |
|
|
* |
(2) |
* |
|
(2) |
Interest expense |
|
(146 |
) |
|
(0.1 |
)% |
|
|
(120 |
) |
|
(0.1 |
)% |
|
|
26 |
|
|
22 |
% |
|
- |
|
|
Other income |
|
80 |
|
|
0.1 |
% |
|
|
68 |
|
|
0.0 |
% |
|
|
12 |
|
|
18 |
% |
|
- |
|
|
Income before income
tax (benefit) expense |
|
(6,821 |
) |
|
(5.7 |
)% |
|
|
10,310 |
|
|
7.4 |
% |
|
|
(17,131 |
) |
|
|
* |
(2) |
* |
|
(2) |
Income tax (benefit)
expense |
|
14,466 |
|
|
12.1 |
% |
|
|
6,584 |
|
|
4.8 |
% |
|
|
7,882 |
|
|
|
* |
(2) |
* |
|
(2) |
Net (loss) income |
$ |
(21,287 |
) |
|
(17.8 |
)% |
|
$ |
3,726 |
|
|
2.7 |
% |
|
$ |
(25,013 |
) |
|
|
* |
(2) |
* |
|
(2) |
- Percentage totals or differences in the above table may not
equal the sum or difference of the components due to rounding.
- Not meaningful.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share |
$ |
(0.61 |
) |
|
|
|
$ |
0.10 |
|
|
|
|
|
|
|
|
|
|
Weighted average
diluted share count |
|
34,809 |
|
|
|
|
|
35,642 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable sales
change |
|
-14% |
|
|
-15% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended |
|
|
|
|
|
|
|
|
February 2, 2019 |
|
February 3, 2018 |
|
Variance |
|
|
In USD |
|
As a %of NetSales |
|
In USD |
|
As a %of NetSales |
|
In USD |
|
% |
|
BasisPoints |
|
Net sales |
$ |
428,115 |
|
|
100.0 |
% |
|
$ |
471,678 |
|
|
100.0 |
% |
|
$ |
(43,564 |
) |
|
(9 |
)% |
|
- |
|
|
Cost of goods sold and
occupancy costs |
|
265,119 |
|
|
61.9 |
% |
|
|
264,915 |
|
|
56.2 |
% |
|
|
204 |
|
|
0 |
% |
|
580 |
|
|
Gross profit |
|
162,996 |
|
|
38.1 |
% |
|
|
206,763 |
|
|
43.8 |
% |
|
|
(43,767 |
) |
|
(21 |
)% |
|
(580 |
) |
|
Selling, general and
administrative expenses |
|
176,379 |
|
|
41.2 |
% |
|
|
176,543 |
|
|
37.4 |
% |
|
|
(164 |
) |
|
0 |
% |
|
380 |
|
|
Asset impairment
charges |
|
20,122 |
|
|
4.7 |
% |
|
|
258 |
|
|
0.1 |
% |
|
|
19,864 |
|
|
|
* |
(2) |
* |
|
(2) |
(Loss) income from
operations |
|
(33,505 |
) |
|
(7.8 |
)% |
|
|
29,962 |
|
|
6.4 |
% |
|
|
(63,467 |
) |
|
|
* |
(2) |
* |
|
(2) |
Interest expense |
|
(426 |
) |
|
(0.1 |
)% |
|
|
(452 |
) |
|
(0.1 |
)% |
|
|
(26 |
) |
|
(6 |
)% |
|
- |
|
|
Other income |
|
483 |
|
|
0.1 |
% |
|
|
346 |
|
|
0.1 |
% |
|
|
137 |
|
|
40 |
% |
|
- |
|
|
Income before income
tax (benefit) expense |
|
(33,448 |
) |
|
(7.8 |
)% |
|
|
29,856 |
|
|
6.3 |
% |
|
|
(63,304 |
) |
|
|
* |
(2) |
* |
|
(2) |
Income tax (benefit)
expense |
|
7,493 |
|
|
1.8 |
% |
|
|
14,295 |
|
|
3.0 |
% |
|
|
(6,802 |
) |
|
|
* |
(2) |
* |
|
(2) |
Net (loss) income |
$ |
(40,941 |
) |
|
(9.6 |
)% |
|
$ |
15,561 |
|
|
3.3 |
% |
|
$ |
(56,502 |
) |
|
|
* |
(2) |
* |
|
(2) |
- Percentage totals or differences in the above table may not
equal the sum or difference of the components due to rounding.
- Not meaningful.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share |
$ |
(1.18 |
) |
|
|
|
$ |
0.43 |
|
|
|
|
|
|
|
|
|
|
Weighted average
diluted share count |
|
34,805 |
|
|
|
|
|
36,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable sales
change |
|
-14% |
|
|
-11% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Francesca’s Holdings
CorporationConsolidated Balance
Sheets(In thousands, except share and per share
amounts)
|
|
February 2, |
|
|
February 3, |
|
|
|
2019 |
|
|
2018 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
20,103 |
|
|
$ |
31,331 |
|
Accounts
receivable |
|
|
16,309 |
|
|
|
16,642 |
|
Inventories |
|
|
30,478 |
|
|
|
26,816 |
|
Prepaid
expenses and other current assets |
|
|
10,357 |
|
|
|
9,714 |
|
Total current
assets |
|
|
77,247 |
|
|
|
84,503 |
|
Property and equipment,
net |
|
|
71,207 |
|
|
|
87,702 |
|
Deferred income
taxes |
|
|
- |
|
|
|
9,413 |
|
Other assets, net |
|
|
4,588 |
|
|
|
3,622 |
|
TOTAL ASSETS |
|
$ |
153,042 |
|
|
$ |
185,240 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
24,330 |
|
|
$ |
17,801 |
|
Accrued
liabilities |
|
|
11,333 |
|
|
|
14,654 |
|
Total current
liabilities |
|
|
35,663 |
|
|
|
32,455 |
|
Landlord incentives and
deferred rent |
|
|
33,989 |
|
|
|
38,337 |
|
Long term debt |
|
|
10,000 |
|
|
|
- |
|
Total liabilities |
|
|
79,652 |
|
|
|
70,792 |
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
Stockholders’
equity: |
|
|
|
|
|
|
|
|
Common
stock-$.01 par value, 80.0 million shares authorized, 46.7 million
and 46.3 million shares issued as of February 2, 2019 and
February 3, 2018, respectively. |
|
|
467 |
|
|
|
463 |
|
Additional paid-in capital |
|
|
112,693 |
|
|
|
111,439 |
|
Retained
earnings |
|
|
120,251 |
|
|
|
159,045 |
|
Treasury
stock, at cost – 11.1 million and 10.3 million shares held at
February 2, 2019 and February 3, 2018, respectively. |
|
|
(160,021 |
) |
|
|
(156,499 |
) |
Total stockholders’
equity |
|
|
73,390 |
|
|
|
114,448 |
|
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
$ |
153,042 |
|
|
$ |
185,240 |
|
|
|
|
|
|
|
|
|
|
Francesca’s Holdings
CorporationConsolidated Statements of Cash
Flows(In thousands)
|
|
Fiscal Year Ended |
|
|
|
February 2, |
|
|
February 3, |
|
|
January 28, |
|
|
|
2019 |
|
|
2018 |
|
|
2017 |
|
Cash Flows Provided by
Operating Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) income |
|
$ |
(40,941 |
) |
|
$ |
15,561 |
|
|
$ |
42,001 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
24,532 |
|
|
|
21,202 |
|
|
|
19,337 |
|
Stock-based compensation expense |
|
|
1,335 |
|
|
|
2,430 |
|
|
|
1,016 |
|
Excess
tax benefit from stock-based compensation |
|
|
- |
|
|
|
- |
|
|
|
(34 |
) |
Asset
impairment charges |
|
|
20,122 |
|
|
|
258 |
|
|
|
141 |
|
Loss on
disposal of assets |
|
|
761 |
|
|
|
733 |
|
|
|
407 |
|
Amortization of debt issuance costs |
|
|
204 |
|
|
|
250 |
|
|
|
245 |
|
Deferred
income taxes |
|
|
8,706 |
|
|
|
6,099 |
|
|
|
(5,411 |
) |
Changes
in assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable |
|
|
246 |
|
|
|
(10,764 |
) |
|
|
3,975 |
|
Inventories |
|
|
(3,699 |
) |
|
|
(2,858 |
) |
|
|
7,583 |
|
Prepaid
expenses and other assets |
|
|
(2,566 |
) |
|
|
(3,177 |
) |
|
|
(3,160 |
) |
Accounts
payable |
|
|
5,739 |
|
|
|
6,013 |
|
|
|
(4,936 |
) |
Accrued
liabilities |
|
|
(558 |
) |
|
|
(11,167 |
) |
|
|
9,467 |
|
Landlord
incentives and deferred rent |
|
|
(4,348 |
) |
|
|
245 |
|
|
|
1,540 |
|
Net cash provided by
operating activities |
|
|
9,533 |
|
|
|
24,825 |
|
|
|
72,171 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows Used in
Investing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
of property and equipment |
|
|
(26,199 |
) |
|
|
(26,778 |
) |
|
|
(21,852 |
) |
Other |
|
|
- |
|
|
|
- |
|
|
|
8 |
|
Net cash used in
investing activities |
|
|
(26,199 |
) |
|
|
(26,778 |
) |
|
|
(21,844 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows Used in
Financing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from borrowings under revolving credit facility |
|
|
10,000 |
|
|
|
- |
|
|
|
- |
|
Repurchases of common stock |
|
|
(3,980 |
) |
|
|
(19,860 |
) |
|
|
(53,853 |
) |
Payment
of debt issuance costs |
|
|
(505 |
) |
|
|
- |
|
|
|
- |
|
Taxes
paid related to net settlement of equity awards |
|
|
(77 |
) |
|
|
(154 |
) |
|
|
(42 |
) |
Proceeds
from the exercise of stock options |
|
|
- |
|
|
|
96 |
|
|
|
512 |
|
Excess
tax benefit from stock-based compensation |
|
|
- |
|
|
|
- |
|
|
|
34 |
|
Net cash used in
financing activities |
|
|
5,438 |
|
|
|
(19,918 |
) |
|
|
(53,349 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash
and cash equivalents |
|
|
(11,228 |
) |
|
|
(21,871 |
) |
|
|
(3,022 |
) |
Cash and cash
equivalents, beginning of year |
|
|
31,331 |
|
|
|
53,202 |
|
|
|
56,224 |
|
Cash and cash
equivalents, end of year |
|
$ |
20,103 |
|
|
$ |
31,331 |
|
|
$ |
53,202 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Disclosures of Cash Flow Information: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid
for income taxes |
|
$ |
75 |
|
|
$ |
24,163 |
|
|
$ |
19,324 |
|
Interest
paid |
|
$ |
209 |
|
|
$ |
192 |
|
|
$ |
192 |
|
Francesca’s Holdings
CorporationSupplemental
Information
Quarterly Sales by Merchandise
Category
|
Thirteen Weeks Ended |
|
|
|
February 2, 2019 |
|
February 3, 2018 |
|
Variance |
|
In USD |
|
|
As a %of Sales |
|
In USD |
|
|
As a %of Sales |
|
In Dollars |
|
% |
|
|
|
(in thousands, except
percentages) |
Apparel |
45,998 |
|
|
38.5 |
% |
|
54,977 |
|
|
39.7 |
% |
|
(8,979 |
) |
|
(16 |
)% |
Jewelry |
31,017 |
|
|
26.0 |
% |
|
32,481 |
|
|
23.5 |
% |
|
(1,464 |
) |
|
(5 |
)% |
Accessories |
21,710 |
|
|
18.2 |
% |
|
24,928 |
|
|
18.0 |
% |
|
(3,218 |
) |
|
(13 |
)% |
Gifts |
19,184 |
|
|
16.1 |
% |
|
24,412 |
|
|
17.6 |
% |
|
(5,228 |
) |
|
(21 |
)% |
Others(1) |
1,401 |
|
|
1.2 |
% |
|
1,693 |
|
|
1.2 |
% |
|
(292 |
) |
|
(17 |
)% |
Net sales |
119,310 |
|
|
100.0 |
% |
|
138,491 |
|
|
100.0 |
% |
|
(19,181 |
) |
|
(14 |
)% |
(1) Includes gift card breakage income, shipping and change
in return reserve.
Quarterly Comparable Sales
|
FY 2018 |
|
FY 2017 |
|
FY 2016 |
Q1 |
(16 |
)% |
|
(5 |
)% |
|
2 |
% |
Q2 |
(13 |
)% |
|
(3 |
)% |
|
0 |
% |
Q3 |
(14 |
)% |
|
(18 |
)% |
|
7 |
% |
Q4 |
(14 |
)% |
|
(15 |
)% |
|
0 |
% |
Fiscal
year |
(14 |
)% |
|
(11 |
)% |
|
2 |
% |
Boutique Count
|
Fiscal Year Ended |
|
February
2, 2019 |
|
February
3, 2018 |
|
January
28, 2017 |
|
Number of boutiques open
at the beginning of period period |
721 |
|
671 |
|
616 |
|
Boutiques opened |
32 |
|
60 |
|
64 |
|
Boutiques closed |
(26 |
) |
(10 |
) |
(9 |
) |
Number of boutiques open
at the end of period |
727 |
|
721 |
|
671 |
|
|
|
|
|
|
|
|
Francesca’s Holdings
CorporationGAAP to Non-GAAP
Reconciliation(In Thousands, Except Per Share
Amounts and Percentages)Thirteen Weeks and Fiscal
Year Ended February 2, 2019
|
Thirteen Weeks Ended February 2,
2019 |
|
GAAP |
|
Professional Fees (1) |
|
Reversal of Stock-based Compensation
(2) |
|
AssetImpairmentCharges (3) |
|
Valuation Allowance(4) |
|
Non GAAP |
SG&A |
$ |
48,081 |
|
|
$ |
(1,424 |
) |
|
$ |
766 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
47,423 |
|
Loss from
operations |
|
(6,755 |
) |
|
|
1,424 |
|
|
|
(766 |
) |
|
|
5,555 |
|
|
|
- |
|
|
|
(542 |
) |
Income tax expense |
|
14,466 |
|
|
|
(553 |
) |
|
|
297 |
|
|
|
(2,155 |
) |
|
|
17,115 |
|
|
|
(29,170 |
) |
Net loss |
|
(21,287 |
) |
|
|
871 |
|
|
|
(469 |
) |
|
|
3,400 |
|
|
|
17,115 |
|
|
|
(370 |
) |
Diluted loss per
share(6) |
|
(0.61 |
) |
|
|
0.03 |
|
|
|
(0.01 |
) |
|
|
0.10 |
|
|
|
0.49 |
|
|
|
(0.01 |
) |
Effective tax
rate(5) |
|
212.1 |
% |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(250.9 |
)% |
|
|
(38.8 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended February 2,
2019 |
|
GAAP |
|
Professional Fees (1) |
|
Reversal of Stock-based Compensation
(2) |
|
AssetImpairmentCharges (3) |
|
Valuation Allowance(4) |
|
Non GAAP |
SG&A |
$ |
176,379 |
|
|
$ |
(1,476 |
) |
|
$ |
766 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
175,669 |
|
Loss from
operations |
|
(33,505 |
) |
|
|
1,476 |
|
|
|
(766 |
) |
|
|
20,122 |
|
|
|
- |
|
|
|
(12,673 |
) |
Income tax expense |
|
7,493 |
|
|
|
(425 |
) |
|
|
221 |
|
|
|
(5,795 |
) |
|
|
17,115 |
|
|
|
(18,609 |
) |
Net loss |
|
(40,941 |
) |
|
|
1,051 |
|
|
|
(545 |
) |
|
|
14,327 |
|
|
|
17,115 |
|
|
|
(8,993 |
) |
Diluted loss per
share(6) |
|
(1.18 |
) |
|
|
0.03 |
|
|
|
(0.02 |
) |
|
|
0.41 |
|
|
|
0.49 |
|
|
|
(0.26 |
) |
Effective tax
rate(5) |
|
22.4 |
% |
|
|
|
|
|
|
|
|
(51.2 |
)% |
|
|
(28.8 |
)% |
- Consists of professional fees associated with the Company’s
review of strategic and financial alternatives and turnaround plan
that commenced in January 2019.
- Reversal of stock-based compensation associated with the
resignation of the former Chief Executive Officer in February
2019.
- The Company recorded $5.6 million and $20.1 million of non-cash
asset impairment charges for the thirteen weeks and fiscal year
ended February 2, 2019, respectively, associated with 24 and 153
underperforming boutiques, respectively, for which the remaining,
or a portion of the remaining, net book value of their respective
assets are no longer expected to be recoverable. Additionally, the
impairment charges for the thirteen weeks and fiscal year ended
February 2, 2019 included $2.9 million and $4.9 million charge,
respectively, associated with the write-off of boutique furniture,
fixtures and supplies that are no longer intended to be uses as a
result of postponing new boutique openings and remodels for future
periods.
- The Company recorded $17.1 million non-cash charge associated
with the recognition of a valuation allowance on its net deferred
tax assets.
- Calculated by dividing income tax expense by the GAAP loss
before income tax expense of $6.8 million and $33.4 million in the
thirteen weeks and fiscal year ended February 2, 2019,
respectively.
- Diluted loss per share components may not equal the sum due to
rounding.
Francesca’s Holdings
CorporationGAAP to Non-GAAP
Reconciliation(In Thousands, Except Per Share
Amounts and Percentages)Fourteen Weeks and Fiscal
Year Ended February 3, 2018
|
Fourteen Weeks Ended February 3,
2018 |
|
GAAP |
|
Remeasurement of Net Deferred Tax
Asset(1) |
|
Non GAAP |
Income tax expense |
6,584 |
|
|
(3,339 |
) |
|
3,245 |
|
Net income |
3,726 |
|
|
3,339 |
|
|
7,065 |
|
Diluted earnings per
share(2) |
0.10 |
|
|
0.09 |
|
|
0.20 |
|
Effective tax
rate(3) |
63.9 |
% |
|
(32.4 |
)% |
|
31.5 |
% |
|
|
|
|
|
|
|
Fiscal Year Ended February 3,
2018 |
|
GAAP |
|
Remeasurement of Net Deferred Tax
Asset |
|
Non GAAP |
Income tax expense |
14,295 |
|
|
(3,339 |
) |
|
10,956 |
|
Net income |
15,561 |
|
|
3,339 |
|
|
18,900 |
|
Diluted earnings per
share(2) |
0.43 |
|
|
0.09 |
|
|
0.52 |
|
Effective tax
rate(3) |
47.9 |
% |
|
(11.2 |
)% |
|
36.7 |
% |
- The Company recorded a non-cash charge as a result of the
remeasurement of the Company’s net deferred tax assets using the
lower federal corporate income tax rate under the Tax Cuts and Jobs
Act enacted in December 2017.
- Diluted earnings per share components may not equal the sum due
to rounding.
- Calculated by dividing income tax expense by the GAAP income
before income tax expense of $10.3 million and $29.9 million in the
fourteen weeks and fiscal year ended February 3, 2018.
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