UPDATE: Francesca's Shares Drop On Weak Outlook

Shares of Francesca's Holdings

slipped 6% in pre-market trading after the company reported financial results for the third quarter and issued a downbeat financial forecast for the fourth quarter. For the fourth quarter, Francesca's expects earnings of $0.13 to $0.19 per share on sales of $96 million to $102 million. Analysts projected a profit of $0.27 per share on sales of $104.1 million. It also expects a 5% to 10% drop in comparable sales. Francesca's also lowered its earnings outlook for the year to $0.75 to $0.81 per share, versus its earlier forecast of $0.88 to $0.98 per share. The Houston, Texas-based company reported a quarterly profit of $7.3 million, or $0.17 per share, versus a year-ago profit of $8.7 million, or $0.20 per share. Its sales climbed 9% to $87.1 million. Francesca's had expected earnings of $0.17 to $0.22 per share on sales of $87 million to $92 million. However, analysts were expecting earnings of $0.17 per share on revenue of $88.40 million. Comparable sales slipped 6% in the quarter. Direct-to-consumer sales climbed 53% versus the previous year quarter. Gross margin shrank to 47.3% from 50.7%. Francesca's opened 12 new boutiques during the quarter. At quarter end, total cash and cash equivalents were $22.8 million, versus $31.8 million at previous year quarter end. Francesca's ended the quarter with $35.4 million of inventory on hand, a 16% gain from $30.6 million at the end of the year-ago quarter. Michael W. Barnes, Chairman, President, and CEO stated, "While the current financial performance is disappointing, I am optimistic about the future of the francesca's brand. After just one week with the Company, I am energized by what I believe to be a distinct business model with enormous potential. My first priority, upon evaluation of the entire business, will be to create a strong foundation for growth.” Francesca's shares declined 6.08% to $14.20 in pre-market trading.