Francesca's Holdings Corporation Reports Third Quarter Results

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  jean.fontana@icrinc.com

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