Loading...
Loading...
Francesca's Holdings Corp
reported its fourth quarter earnings on March 25th, 2014. Shares of the company are up 17.50 percent or $3.65 per share to $17.21. Below are some key takeaways from its conference call:
Neill Davis, Chief Executive Officer:
• As we reported earlier this
morning, our sales results for the fourth quarter increased 11% from the
prior year 13-week quarter.
• Sales results in regions less affected by the extreme weather, performed
within our revised fourth quarter guidance.
• Although, we did not achieve our
top line expectation for the quarter, we did achieve adjusted diluted
earnings per share of $0.27, in line with our revised outlook and driven by
lower selling, general, and administrative expenses.
• For the fiscal year compared to the comparable 52 weeks in the prior year,
sales increased 16%, driven by 91 new boutique openings, bringing our
location count to 451 as well as continued strong growth in our
direct-to-consumer business, specifically an increase of 92% with
favorability across all key performance metrics.
• However, our merchandise gross margins only declined 70 basis points for the
year. This is a direct reflection of the underlying strength of our business
model.
• Our outlook for the quarter is based on current trends and we expect to see
continued top line and margin pressure from apparel and jewelry categories as
we clear through carryover merchandise in the first quarter and complete mix
shift transitions in the first half.
• Underpinning our full year outlook of double-digit growth rates in sales and
diluted earnings per share, is an improving trend in the second half of the
fiscal year based on new boutique openings and related sales productivity,
improving comparable sales results aided by easier second half comparisons,
and further leverage of prior year infrastructure investments.
• We continue to expect our sales mix, represented by apparel to be within
historical ranges of approximately 50%. However, penetration within our
offerings will be more balanced between dresses and our separates business,
which will help mitigate risk of concentrations.
• The back half investments of 2013 included the expansion of our managerial
field organization to include area managers, which is one step above the
boutique manager level.
• We are expanding our boutique base in 2014 with 85 new locations identified
and 75 leases executed. The majority of those are planned to open in the
first quarter and the balance in the second quarter.
• We continue to size the market at approximately 900 domestic locations. Our
new boutiques continue to meet thresholds of sales productivity, return on
invested capital and payback timing. We target new boutique productivity
close to maturity levels, which is generally near 10% of chain average and we
met those in fiscal 2013.
• Sales through francescas.com increased over 90% this past year and quarter.
40% of that growth was traffic driven with over 12 million visitors and the
balance was from conversion and average order value.
• In the fourth quarter, we initiated several customer engagement activities,
including an Instagram program and a fashion sponsorship with the cable
network Lifetime and their launch of a Project Runway spin-off called Under
the Gunn, which runs for 13 weeks through mid-April.
Mark Vendetti, Chief Financial Officer:
• Total company net sales for the fourth quarter increased 6% to $92.1 million
or 11% on a restated NRF retail calendar. This increase was driven by 91 new
boutiques opened since we ended the fourth quarter of fiscal 2012 with 5
openings during the fourth fiscal quarter of 2013.
• Comparable sales decreased 6%, this compares to a 10% increase in comparable
sales in the same period last year. The overall comparable sales decrease was
driven by a 4% decrease in comparable transaction counts and a 2% decrease in
average transaction size.
• As Neill discussed extreme weather in January caused the direct loss of over
370 boutique selling days, which caused more than 10 times the level of
selling days impacted by weather last year.
• Adjusted income from operations was $19.1 million with operating profit
margin of 20.7% compared to income from operations of $24.7 million with an
operating profit margin of 28.5% in the prior year 14-week period.
• Turning to the full year; net sales increased 16% to $340.3 million compared
to the prior 52-week year period. The overall company increase in net sales
was driven by new boutique growth with new boutiques contributing
approximately $45 million in sales.
• Comparable sales decreased 2% compared to the prior year comparable sales increase of 16%.
• Our merchandise margins decreased 70 basis points to last year due to more
frequent promotions and higher levels of markdown during the year. The
incremental activities offered in a more competitive retail environment in
2013 lowered average unit retails and were offset by higher units per
transaction.
• I would point out and highlight that our merchandise margins to
remain consistent within a range of 70 basis points in the last four years.
Adjusted net income was $46.2 million or $1.05 per diluted share based on
44.1 million weighted shares outstanding.
• This compares to adjusted net
income of $47.9 million or $1.07 per diluted share based on 44.8 million
weighted average shares outstanding in fiscal 2012.
• This includes the impact
of a 53-week which was worth an approximate $0.03 per fully diluted share.
Turning to the balance sheet; total inventories at the end of the quarter
increased by $5.6 million to $24.6 million.
• Ending inventory was up 3% on a
per boutique basis at the end of the quarter, driven by an increase in
clearance inventory which carried over to the first quarter.
• During the quarter, the company repurchased approximately 1 million shares of
company's common stock for $17.9 million at an average price of $18.84
million. To-date, the company repurchased 2.9 million shares for $54.8
million at an average price per share of $18.95.
• Now turning to the first quarter and full year guidance; for the first
quarter, the harsh weather that impacted January continued into February. As
a result, transactions continued to be weak in February and we experienced a
similar number of boutique selling days impacted in February as January.
Loading...
Loading...
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Benzinga simplifies the market for smarter investing
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
Join Now: Free!
Already a member?Sign in