Francesca's Holdings Corporation Reports Third Quarter Results *Q3 2012 net sales increased 44% to $72.0 million; comparable boutique sales increased 16.7% *Q3 2012 adjusted diluted EPS was $0.24, a 71% increase over the prior year adjusted diluted EPS of $0.14 *Q4 2012 diluted EPS guidance set at $0.27 to $0.28 *FY 2012 adjusted diluted EPS guidance increased to a range of $1.00 to $1.01 HOUSTON, Dec. 5, 2012 (GLOBE NEWSWIRE) -- Francesca's Holdings Corporation (Nasdaq:FRAN) today reported net income for the third quarter of fiscal 2012 of $10.8 million or $0.24 per diluted share compared to net income for the third quarter of fiscal 2011 of $4.7 million, or $0.11 per diluted share. Adjusted net income for third quarter fiscal 2012 was $11.0 million, or $0.24 per diluted share, after excluding the $342,000 pretax ($209,000, net of tax) charge related to the relocation of our headquarters and distribution facilities. Adjusted net income for the third quarter of fiscal 2011 was $6.1 million, or $0.14 per diluted share, excluding a $2.3 million pretax ($1.4 million net of tax), or $0.03 per diluted share, stock-based compensation expense. Third Quarter Summary Net sales increased 44% to $72.0 million driven by a 16.7% increase in comparable boutique sales over a prior year period 6.5% increase and 76 new boutique openings since the end of the third quarter last year. The comparable sales increase was driven by increased transactions while average sale per transaction remained constant with prior year levels. Gross profit for the quarter increased by 47% to $37.9 million. The gross profit rate improved 96 basis points to 52.61%. The increase in gross profit rate was the result of leveraging boutique occupancy costs. Adjusted^(1) selling, general and administrative expenses for the quarter increased by 27% to $19.8 million. Total adjusted^(1) SG&A, as a percentage of net sales, decreased by 355 basis points to 27.51%. The decrease in rate is primarily due to leverage of costs as sales growth significantly outpaced expense growth. Adjusted^(1) income from operations for the quarter increased by 76% to $18.1 million, with an adjusted^(1) operating profit margin of 25.10%. For the year to date period, net sales increased 47% to $209.7 million driven by a 17.7% increase in comparable boutique sales. Adjusted earnings per diluted share was $0.73 after excluding charges related to the relocation of our headquarters and distribution facilities, secondary equity offering and option acceleration costs, these adjustments are set forth below in detail. Total inventories at the end of the quarter increased by $7.0 million to $23.5 million, a 42% increase versus the prior comparable quarter. Inventory per boutique increased 12%. The Company completed the relocation of its headquarters and distribution facility with no disruption to business. John De Meritt, CEO, commented, "We delivered another quarter of strong results, demonstrating the appeal of our business model of a differentiated merchandise strategy in a boutique environment. Our scalable, high margin merchandising model combined with productive new boutique economics provides a runway for boutique growth and gives us confidence in francesca's® long-term growth potential." Neill Davis, President, added, "We continued to see strong sales growth during the third quarter, with comparable boutique sales growth of 16.7%, exceeding previous guidance and on top of the prior year 6.5% increase.Our performance reflects ongoing momentum as customers continue to respond favorably to francesca's® broad and shallow merchandise assortment and unique shopping experience. We are pleased with the momentum that we have built behind the business and the prospects that lay ahead as we continue to execute on our key operating initiatives." _______________ ^(1) Excludes $342,000 charge related to the relocation of our headquarters and distribution facilities in fiscal year 2012 and $2.3 million of stock-based compensation expense in fiscal year 2011. Fourth Quarter and Fiscal 2012 Outlook For the fourth quarter ending February 2, 2013, net sales are expected to be between $82.5 million and $83.5 million assuming a mid-single digit comparable boutique sales increase and the opening of one additional new boutique.Earnings per diluted share are expected to be in the range of $0.27 to $0.28. For the full fiscal year ending February 2, 2013, net sales are expected to be in the range of $292.2 million to $293.2 million assuming a low double digit comparable boutique sales increase and the opening of 76 new boutiques and an outlet boutique. Earnings per diluted share are expected to be in the range of $0.99 to $1.00.Excluding $0.2 million after tax relocation costs of the Company's headquarters and distribution facilities, $0.4 million after tax secondary equity offering and option acceleration costs, or $0.01 per diluted share, adjusted earnings per diluted share are expected to be in the range of $1.00 to $1.01. The Company uses the NRF calendar; therefore fiscal year 2012 will be a 53-week year.We estimate that the additional week will contribute approximately $3.5 million in net sales and $0.03 per diluted share in incremental earnings. Subsequent Events Subsequent to October 27, 2012, the northeast region of the United States was heavily impacted by hurricane Sandy.There were approximately 60 boutiques located in the affected region that were forced to temporarily close for at least one full business day. Comparable boutique sales results for the month of November were in line with Company expectations.November sales exceeded plan for the final week of the month which offset the estimated immaterial effects of Hurricane Sandy. Conference Call Information A conference call to discussthird quarter results is scheduled for December 5, 2012, at 8:00 a.m. ET. A live web cast of the conference call will be available in the investor relations section of the Company's website, www.francescas.com. In addition, a replay of the call will be available after the call and remain available until January 5, 2013. To access the telephone replay, listeners should dial (877) 870-5176. The access code for the replay is 4490673. A replay of the web cast will also be available shortly after the call and will remain on the website for ninety days. SEC Regulation G – Non-GAAP Information This press release includes non-GAAP adjusted selling, general and administrative expenses, adjusted income from operations, adjusted operating profit margin, adjusted net income and adjusted diluted earnings per share, each a non-GAAP financial measure. We have reconciled these non-GAAP financial measures with the most directly comparable GAAP financial measures in the text above. We believe that these non-GAAP financial measures not only provide our management with comparable financial data for internal financial analysis but also provide meaningful supplemental information to investors. Specifically, these non-GAAP financial measures allow investors to better understand the performance of our business and facilitate a meaningful evaluation of our quarterly and fiscal year 2012 diluted earnings per share and actual results on a comparable basis with our quarterly and fiscal year 2011 results. These non-GAAP measures should be considered a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. 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. 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 we expected. For a discussion of these and other risks and uncertainties that could cause actual results to differ materially from those contained in our forward-looking statements, please refer to "Risk Factors" in our Annual Report on Form 10-K and our most recent Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on March 21, 2012 and September 4, 2012, respectively. We undertake no obligation to publicly update or revise any forward-looking statement. Financial schedules are attached to this release. About Francesca's Holdings Corporation Francesca's® is a growing specialty retailer with retail locations designed and merchandised to feel like independently owned, upscale boutiques providing customers a fun and differentiated shopping experience. The merchandise assortment is a diverse and balanced mix of apparel, jewelry, accessories and gifts. Francesca's® appeals to the 18-35 year-old, fashion conscious, female customers, although the Company finds that women of all ages are attracted to the eclectic and sophisticated merchandise selection and boutique setting. Francesca's® boutiques carry a broad selection but limited quantities of individual styles and new merchandise is introduced five days a week. For additional information on Francesca's®, please visit www.francescas.com The Francesca's Collections logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=15831 Francesca's Holdings Corporation Unaudited Consolidated Statements of Operations (In thousands, except per share data and percentages) Thirteen Weeks Ended October 27, 2012 October 29, 2011 Variance As a % As a % Basis In USD of Net In USD of Net In USD % Points Sales^(1) Sales^(1) (Inthousandsexceptper share data) Net sales $ 100.00% $50,020 100.00% $21,966 43.9% 0.00% 71,986 Cost of goods sold and occupancy 34,115 47.39% 24,187 48.35% 9,928 41.0% -0.96% costs Gross profit 37,871 52.61% 25,833 51.65% 12,038 46.6% 0.96% Selling, general and administrative 20,144 27.98% 17,789 35.56% 2,355 13.2% -7.58% expenses Income from 17,727 24.63% 8,044 16.08% 9,683 120.4% 8.55% operations Interest expense (114) -0.16% (473) -0.95% 359 -75.9% 0.79% Other income 105 0.15% 198 0.40% (93) -47.0% -0.25% Income before 17,718 24.61% 7,769 15.53% 9,949 128.1% 9.08% income tax expense Income tax expense 6,921 9.61% 3,025 6.05% 3,896 128.8% 3.56% Net income $ 15.00% $ 4,744 9.48% $ 6,053 127.6% 5.52% 10,797 Diluted earnings (loss) per common $0.24 $0.11 share Weighted average diluted shares 44,911 44,533 outstanding: Comparable boutique sales 16.7% 6.5% increase Thirty Nine Weeks Ended October 27, 2012 October 29, 2011 Variance As a % As a % Basis In USD of Net In USD of Net In USD % Points Sales^(1) Sales^(1) (Inthousandsexceptper share data) Net sales $209,673 100.00% $142,506 100.00% $67,167 47.1% 0.00% Cost of goods sold and 97,443 46.47% 68,048 47.75% 29,395 43.2% -1.28% occupancy costs Gross profit 112,230 53.53% 74,458 52.25% 37,772 50.7% 1.28% Selling, general and 58,960 28.12% 45,388 31.85% 13,572 29.9% -3.73% administrative expenses Income from 53,270 25.41% 29,070 20.40% 24,200 83.2% 5.01% operations Interest (546) -0.26% (4,529) -3.18% 3,983 -87.9% 2.92% expense Loss on early extinguishment -- 0.00% (1,591) -1.12% 1,591 -100.0% 1.12% of debt Other income 257 0.12% 248 0.17% 9 3.6% -0.05% Income before income tax 52,981 25.27% 23,198 16.28% 29,783 128.4% 8.99% expense Income tax 20,790 9.92% 9,050 6.35% 11,740 129.7% 3.57% expense Net income $ 32,191 15.35% $ 14,148 9.93% $18,043 127.5% 5.42% Diluted earnings (loss) $0.72 $0.33 per common share Weighted average diluted 44,791 42,421 shares outstanding: Comparable boutique sales 17.7% 8.4% increase ^(1)Percentage totals in the above table may not equal the sum of the components due to rounding. Francesca's Holdings Corporation Unaudited Consolidated Balance Sheets (In thousands) October 27, January28, October 29, 2012 2012 2011 ASSETS Current assets: Cash and cash equivalents $ 12,906 $14,046 $14,982 Accounts receivable 5,076 2,156 3,571 Inventories 23,523 14,462 16,546 Deferred income taxes 2,872 2,352 1,784 Prepaid expenses and other current assets 4,622 3,025 3,041 Total current assets 48,999 36,041 39,924 Property and equipment, net 43,021 33,199 29,973 Deferred income taxes 1,923 952 — Other assets, net 2,372 2,120 2,698 TOTAL ASSETS $96,315 $72,312 $72,595 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable $11,811 $8,627 $8,713 Accrued liabilities 6,649 9,893 5,931 Total current liabilities 18,460 18,520 14,644 Deferred and accrued rents 21,895 14,890 14,839 Deferred income taxes — — 455 Long-term debt — 22,000 35,000 Total liabilities 40,355 55,410 64,938 Commitments and contingencies Stockholders' equity (deficit): Common stock -- $.01 par value, 80.0million shares authorized; 43.9million shares issued and outstanding at October 27, 2012; 43.5million shares 438 435 435 issued and outstanding at January28, 2012; and 43.5million shares issued and outstanding at October 29, 2011. Additional paid-in capital 83,935 77,071 76,179 Accumulated deficit (28,413) (60,604) (68,957) Total stockholders' equity 55,960 16,902 7,657 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $96,315 $72,312 $72,595 (DEFICIT) Francesca's Holdings Corporation Unaudited Consolidated Statements of Cash Flows (In thousands) Thirty Nine WeeksEnded October 27, October 29, 2012 2011 Cash Flows From Operating Activities: Net income $ 32,191 $14,148 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense 5,458 3,509 Stock-based compensation expense 2,684 3,907 Excess tax benefit from stock-based compensation (2,193) (449) Loss on sale of assets 89 20 Amortization of debt issuance costs 220 462 Loss on early extinguishment of debt — 1,591 Deferred income taxes (1,491) 2,696 Changes in assets and liabilities: Accounts receivable (2,920) 931 Inventories (9,061) (4,677) Prepaid expenses and other assets (2,068) (965) Accounts payable 3,184 2,567 Accrued liabilities (1,051) (479) Deferred and accrued rents 7,005 6,616 Net cash provided by operating activities 32,047 29,877 Cash Flows Used by Investing Activities: Purchase of property and equipment (15,370) (12,236) Other — 35 Net cash used in investing activities (15,370) (12,201) Cash Flows Used by Financing Activities: Proceeds from issuance of stock in initial public — 44,118 offering, net of costs Proceeds from borrowing under the new revolving credit — 41,000 facility Repayment of borrowings under the prior senior secured — (93,813) credit facility Repayment of borrowings under the new revolving credit (22,000) (6,000) facility Payment of debt issuance costs — (1,468) Proceeds from the exercise of stock options 1,990 504 Excess tax benefit from stock-based compensation 2,193 449 Net cash used in financing activities (17,817) (15,210) Net increase (decrease) in cash and cash equivalents (1,140) 2,466 Cash and cash equivalents, beginning of year 14,046 12,516 Cash and cash equivalents, end of period $12,906 $14,982 Supplemental Disclosures of Cash Flow Information: Cash paid for income taxes $26,182 $6,300 Interest paid $405 $5,027 CONTACT: ICR, Inc. Jean Fontana: 646-277-1214 email@example.com company logo
Francesca's Holdings Corporation Reports Third Quarter Results
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