Signs of Restoration at Francesca's Store Locations

Francesca's Announces Turnaround and Q3 Improvements

Francesca's, the popular women's fashion retailer, has made significant strides in its business, as it reported a 1% increase in store comparables for the third quarter – the first positive growth in store comps in the last 10 quarters.

The company, which has been navigating various challenges such as executive turnover, a possible hostile takeover, and a looming stock market de-listing, has been addressing these issues one by one. To avoid de-listing, Francesca's underwent a reverse stock split.

Despite the positive news, Francesca's shares saw a sharp decline, likely due to sales missing expectations. The retailer's third quarter net sales were $95.5 million, relatively flat compared to the same period last year. However, the net loss for the quarter shrank significantly, from $16.2 million last year to $5.1 million this year.

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. Comparable sales rose 1% in the third quarter, thanks to a higher conversion rate and an increase in average units sold per transaction.

Francesca's Interim CEO, Michael Prendergast, described the company as being in the midst of a turnaround. He also announced that the company has initiated a formal search for a permanent CEO with the help of an executive search firm. Prendergast will stay on during the CEO search process and beyond, through a reasonable transition period.

In terms of operational changes, Francesca's is implementing improvements in merchandising, marketing, store count, supply chain, and e-commerce. The company opened one new store and closed five underperforming locations during the third quarter, bringing the total to 714 stores at the end of the quarter. Francesca's now runs 343 mall stores and 371 stores outside of malls, including 91 outlets.

The company also addressed the issue of executive turnover by replacing its CFO. As a precautionary measure, Francesca's adopted a poison pill.

It's important to note that while Francesca's has made progress, there are still challenges ahead. At least three more stores will close by the end of the year. The company has not yet announced a formal search for a permanent CEO, according to the provided search results.

Despite these challenges, Francesca's remains optimistic about its future. Prendergast remains confident in the company's ability to continue its turnaround and navigate the retail landscape successfully.