UPDATE: Janney Capital Downgrades Francesca's Holdings as Environment Pressures Margins

In a report published Tuesday, Janney Capital Markets analyst Adrienne Tennant downgraded the rating on

from Buy to Neutral. In the report, Janney Capital Markets noted, “We are downgrading shares of FRAN to Neutral from Buy based on the following: 1) challenging mall traffic and promotional environment that we believe will continue to pressure margins over the next 12 months, 2) potential for sustained negative comps in the near-to-medium-term, and 3) apparel and accessory trends that are not as strong as prior year. Our channel checks suggest that FRAN could be succumbing to the promotional pressure inherent in the Young Adult/Young Women's sector, with the need to run store-wide and site-wide promotions thus far in 4Q13. Our checks also suggest that both apparel and accessory inventory is beginning to build and may need incremental promotions to drive sales. We point out that while accessories are still a strong and growing category, the color accessory trends we saw over the past year are beginning to ebb.” Francesca's Holdings Corporation closed on Monday at $20.04.