Signs of recovery at Francesca's establishment

Francesca's Reports Improved Financial Performance and Ongoing Turnaround Efforts

Francesca's, the popular retailer known for its women's clothing and accessories, has reported a significant improvement in its financial performance during the third quarter. The company's net loss shrank to $5.1 million, a marked decrease from $16.2 million in the same quarter of the previous year. Loss from operations also narrowed, falling from $23.1 million to $4.2 million.

The CEO of Francesca's, Michael Prendergast, attributed the improved sales to higher markdowns on slow-selling merchandise and the success of new product launches. Gross profit as a percentage of net sales expanded by 400 basis points to 39.3%, primarily due to higher margins and lower occupancy costs.

Despite these positive developments, shares of Francesca's were down sharply in response to the third-quarter results. The retailer has been facing a tumultuous year, including executive turnover, potential stock market de-listing, and a possible hostile takeover.

To address these challenges, Francesca's has undertaken a series of changes. The company implemented a reverse stock split, replaced its CFO, and adopted a poison pill. It has also been working on improvements in merchandising, marketing, store count, supply chain, and e-commerce as part of a turnaround.

Francesca's currently operates 343 mall stores and 371 stores outside of malls, including 91 outlets. In the third quarter, one new store opened and five underperforming locations closed, resulting in a total of 714 stores at the quarter's end. At least three more stores will close by the end of the year.

Prendergast expressed encouragement about the success of new product sales and believes it validates the company's go-forward strategy. He will remain on during the transition period once a CEO is found, as the board of Francesca's has initiated a formal search for a permanent CEO with the help of an executive search firm.

Consumer data is becoming more readily available, opening up new opportunities for retailers to tap into shopper data. Francesca's is leveraging this trend to personalize the shopper experience. Store comps for Francesca's rose positively in the third quarter, improving from a 5% decline in the previous quarter and marking an improvement in sales trends. Comparable sales rose 1% in the third quarter, due to a higher conversion rate and an increase in average units sold per transaction.

As Francesca's continues to navigate its turnaround, it remains committed to delivering quality products and a unique shopping experience to its customers.