francesca’s® Announces Delay in Fiscal 2018 10-K Filing and Provides Preliminary Estimated Results for Fourth Quarter Fisc...
April 18 2019 - 3:01PM
Francesca’s Holdings Corporation (Nasdaq: FRAN) today announced the
Company is delaying the release of its financial results for the
fourth quarter and fiscal year ended February 2, 2019. The
Company will file a Form 12b-25 Notification of Late Filing for its
Annual Report on Form 10-K with the Securities and Exchange
Commission extending the deadline to file and will now file on or
before May 3, 2019. The extension is necessary for the
Company to complete its year-end closing procedures because the
Company cannot timely complete its year-end closing procedures
without unreasonable effort or expense while simultaneously
undergoing its previously announced review of strategic and
financial alternatives. The Company is providing preliminary
estimated results, or range of estimated results, for the fourth
quarter ended February 2, 2019 and will provide a press release on
or before May 3, 2019 announcing the actual earnings once
finalized.
- Estimated net sales for the fiscal 2018 fourth quarter
decreased -14% to $119.3 million from $138.5 million in the fourth
quarter last year, reflecting a comparable sales decrease of -14%
primarily resulting from boutique traffic declines in the
low-teens. This is within the previously announced comparable
sales decline guidance range of -15% to -10%.
- Estimated adjusted diluted net loss per share for the fiscal
2018 fourth quarter is expected to be between ($0.03) and ($0.01)
versus the previously announced guidance range of ($0.14) to
($0.07). Estimated adjustments to diluted net loss per share
include non-cash asset impairment charges and expenses associated
with the Company’s review of strategic and financial alternatives
and the turnaround plan commenced in January 2019.
Additionally, estimated adjustments include the stock-based
compensation expense reversal associated with the resignation of
the former Chief Executive Officer in February 2019.
See “Non-GAAP Information” below for additional
information.
- As of February 2, 2019, it is estimated that cash and cash
equivalents were approximately $20.1 million and the Company had
$10.0 million outstanding under its asset-based revolving credit
facility (“ABL”). As of April 6, 2019, it is estimated that
cash and cash equivalents were approximately $14.2 million and the
Company had $15.0 million outstanding under its ABL revolving
credit facility with an estimated additional $9.0 million in
availability. Additionally, the Company expects to receive an
IRS refund of $8.4 million before the end of fiscal May 2019.
Michael Prendergast, Interim Chief Executive Officer, stated,
“We are well underway with the implementation of a comprehensive
turnaround plan to drive improved sales and margin performance
through enhanced merchandise offerings and buying processes as well
as aligning our expense structure to the current sales
levels. We believe these actions will return the
company to positive sales, cash flow, and operating income
performance over the longer term. We look forward to
providing more detail on our progress on the fourth quarter
conference call.”
The turnaround plan involves all functional areas of the
Company. Below is a brief overview of current accomplishments
and in-progress
initiatives:
- Identification of approximately $15 million in annualized gross
SG&A savings, before costs associated with achieving those
savings. Savings began to take effect in late February 2019
primarily through optimization of boutique payroll and execution of
workforce reductions in both the corporate office and field
management. As the Company actively works to further reduce
overall expenses, additional savings have begun to be
realized.
- For the first quarter fiscal 2019, the Company expects a modest
deceleration in comparable sales declines attributable to the
simplification of the promotional strategy and markdown cadence as
well as enhancements to its merchandise presentation in the
boutiques.
- The Company has started to implement buying, merchandising and
planning processes to better realign with demand based, fast
fashion principles and expects merchandise improvements to be
reflected in the boutique assortments in early June
2019.
- Management is aggressively working to optimize the boutique
real estate portfolio to improve their financial performance.
With a network of over 700 stores there are many opportunities to
reduce the cost structure and increase boutique
productivity.
Preliminary Estimated Results
The Company’s announced preliminary estimated results for its
fiscal fourth quarter ended February 2, 2019 are preliminary and
may change. The Company has not completed its normal
quarterly and year-end closing procedures for the quarter and year
ended February 2, 2019 and there can be no assurance that final
results for the quarter and year-end will not differ from the
preliminary estimated results included herein, including as a
result of year-end closing procedures adjustments. In
addition, these preliminary estimated results should not be viewed
as a substitute for full interim or audited financial statements
prepared in accordance with GAAP that have been reviewed and/or
audited by the Company’s auditors.
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 estimated non-GAAP adjusted diluted
loss per share, a non-GAAP financial measure. The Company believes
this non-GAAP financial measure not only provides the Company’s
management with comparable financial data for internal financial
analysis but also provides meaningful supplemental information to
investors. Specifically, this non-GAAP financial measure allows
investors to better understand the performance of the business and
facilitate a meaningful evaluation of the Company’s preliminary
estimate for diluted loss per share for the fourth quarter of
fiscal year 2018. This non-GAAP measure should be considered a
supplement to, and not as a substitute for or superior to,
financial measures calculated in accordance with GAAP. No
reconciliation of estimated non-GAAP adjusted diluted loss per
share is provided in this press release because some of the
excluded information is not yet ascertainable or accessible and the
Company is unable to quantify certain amounts that would be
required to be included in the most directly comparable GAAP
financial measure without unreasonable efforts.
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® operated 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 Fontana646-277-1214
CompanyKelly Dilts 832-494-2236Kate Venturina
832-494-2233IR@francescas.com
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