francesca's Reports First Fiscal Quarter 2013 Financial Results *Net sales increased 29% to $79.0 million *Comparable sales increased 2% *Adjusted diluted earnings per share increased 24% to $0.26 HOUSTON, June 5, 2013 (GLOBE NEWSWIRE) --Francesca's Holdings Corporation (Nasdaq:FRAN) today reported net income for the first quarter of 2013 of $10.9 million or $0.24 per diluted share, compared to net income for the first quarter of 2012 of $8.7 million, or $0.20 per diluted share. Adjusted net income for the first quarter of 2013 was $11.5 million, or $0.26 per diluted share, excluding $0.6 million net of tax charges related to a secondary equity offering, compared to adjusted net income for the first quarter of 2012 of $9.2M, or $0.21, excluding $0.5 million net of tax charges related to a secondary equity offering. Neill Davis, Chief Executive Officer, commented, "We delivered on our earnings expectations as well as several strategic goals in the first quarter. We opened 56 new boutiques increasing our market presence to 416 boutiques, achieved record direct-to-consumer sales now representing 2.1% of total Company sales for the quarter, and successfully completed the rollout of our new point-of-sale system in our boutiques. Our continued execution on key growth initiatives combined with our differentiated business model and unique brand experience position us well for long term growth." FIRST QUARTER SUMMARY Net sales for the thirteen weeks increased 29% to $79.0 million driven by 56 new boutique openings in the first quarter. Sales growth rates were strongest in jewelry and accessories, outpacing increases in clothing and gifts. Comparable sales, including direct-to-consumer sales, increased 2% on top of a 16% increase in the prior year quarter.Direct-to-consumer achieved record sales with a 97% increase over the prior year quarter driven by increases in traffic, conversion rates, and average transaction values.Comparable sales, excluding direct-to-consumer sales, were flat to the prior year quarter and below the Company's expectations of an increase in the range of 4% to 5%.The decrease was driven by lower than expected transactions as a reflection of the unseasonable weather conditions that persisted throughout the quarter. Gross profit, as a percentage of net sales, was 52.4% compared to 53.1% in the prior year quarter, resulting from lower merchandise margins due to higher levels of promotions compared to the prior year quarter. Selling, general and administrative (SG&A) expenses excluding $0.6 million in charges related to a secondary equity offering increased 31% to $22.8 million or 28.8% of net sales compared to the prior year quarter, excluding $0.5 million in charges related to a secondary equity offering, of $17.4 million or 28.4% of sales. The increase was principally due to operating additional boutiques and infrastructure investments to support the larger boutique base and direct-to-consumer sales growth. Adjusted income from operations for the quarter increased 23% to $18.6 million or 23.5% of net sales compared to $15.1 million or 24.7% of net sales in the prior year quarter. BALANCE SHEET SUMMARY Total cash and cash equivalents at quarter end were $33.8 million compared to $8.2 million at the prior year quarter end, and $29.9 million at the end of fiscal 2012.The Company had no long-term debt at the end of the quarter compared to $12.0M at the end of the prior year quarter. Total inventories, excluding reserves, increased 28% over the prior year quarter and was in-line with net sales growth. SECOND FISCAL QUARTER AND FULL FISCAL YEAR 2013 GUIDANCE For the second quarter ending August 3, 2013, net sales are expected to be between $94.5 million and $95.5 million assuming a 1% to 2% increase in comparable sales including direct-to-consumer on top of the prior year comparable sales increase of 21% and the opening of approximately 21 additional new boutiques. Earnings per diluted share are expected to be in the range of $0.35 to $0.36, an increase of 21% to 24% over the prior year adjusted diluted earnings per share of $0.29, excluding $0.2 million net of tax related to stock option acceleration. For the full year ending February 1, 2014, net sales are expected to be in the range of $365.0 million to $370.0 million assuming a 4% to 5% increase in comparable sales including direct-to-consumer and the opening of 85 new boutiques. Adjusted diluted earnings per share are expected to be in the range of $1.27 to $1.30.This is an increase of 22% to 25% over the 52- week prior year adjusted diluted earnings per share of $1.04 which excludes $0.5 million net of tax charge related to a secondary equity offering, $0.2 million net of tax charge related to stock option acceleration, $0.2 million net of tax charge related to the relocation of our headquarters and distribution facilities, and an approximate $0.03 of diluted earnings per share impact from the 53^rd week. The number of diluted average shares outstanding is expected to be 44.9 million for both the second quarter and full year.The effective tax rate is estimated to be 39.3% for the second quarter and the full year. Capital expenditures are planned in a range of $22.0 to $25.0 million. Conference Call Information A conference call to discuss first quarter 2013 results is scheduled for June 5, 2013, at 4:30 p.m. EDT. 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 July 5, 2013. To access the telephone replay, listeners should dial (877) 870-5176. The access code for the replay is 5635323. 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 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 2013 diluted earnings per share and actual results on a comparable basis with our quarterly and fiscal year 2012 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 filed with the Securities and Exchange Commission on March 22, 2013. 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. Today francesca's® operates 429 boutiques in 44 states and also serves its customers through francescas.com. For additional information on francesca's®, please visit www.francescas.com. Francesca's Holdings Corporation Consolidated Statements of Operations Thirteen Weeks Ended May 4, 2013 April 28, 2012 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 $78,987 100.0% $61,322 100.0% $17,665 29% 0.0% Cost of goods sold 37,615 47.6% 28,779 46.9% 8,836 31% 0.7% and occupancy costs Gross profit 41,372 52.4% 32,543 53.1% 8,829 27% (0.7)% Selling, general and administrative 23,351 29.6% 17,885 29.2% 5,466 31% 0.4% expenses Income from 18,021 22.8% 14,658 23.9% 3,363 23% (1.1)% operations Interest expense (116) (0.1)% (255) (0.4)% 139 (55)% 0.3% Other income 83 0.1% 37 0.1% 46 124% 0.0% Income before income 17,988 22.8% 14,440 23.5% 3,548 25% (0.7)% tax expense Income tax expense 7,051 8.9% 5,698 9.3% 1,353 24% (0.4)% Net income $10,937 13.8% $8,742 14.3% $2,195 25% (0.5)% Diluted earnings (loss) per common $0.24 $0.20 share Weighted average diluted shares 44,880 44,702 outstanding: Comparablesales change 2% 16% ^(1)Percentage totals in the above table may not equal the sum of the components due to rounding. Francesca's Holdings Corporation Consolidated Balance Sheets (In thousands) May 4, 2013 February 2, April 28, 2012 2013 ASSETS Current assets: Cash and cash equivalents $33,763 $29,877 $8,221 Accounts receivable 7,645 2,504 6,479 Inventories 23,330 19,049 17,642 Deferred income taxes 3,567 3,506 2,456 Prepaid expenses and other current 4,772 4,749 3,248 assets Total current assets 73,077 59,685 38,046 Property and equipment, net 55,729 49,559 38,205 Deferred income taxes 2,893 2,357 2,200 Other assets, net 1,383 1,573 2,069 TOTAL ASSETS $133,082 $113,174 $80,520 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $8,623 $8,358 $10,077 Accrued liabilities 14,010 10,667 11,458 Total current liabilities 22,633 19,025 21,535 Deferred and accrued rents 26,151 22,092 19,245 Long-term debt — — 12,000 Total liabilities 48,784 41,117 52,780 Commitments and contingencies Stockholders' equity: Common stock -- $.01 par value, 80.0million shares authorized; 44.0million shares issued and outstanding at May 4, 2013; 440 439 436 43.9million shares issued and outstanding at February 2, 2013; 43.6million shares issued and outstanding at April 28, 2012. Additional paid-in capital 86,464 85,161 79,166 Accumulated deficit (2,606) (13,543) (51,862) Total stockholders' equity 84,298 72,057 27,740 Total liabilities and stockholders' $133,082 $113,174 $80,520 equity Francesca's Holdings Corporation Consolidated Statements of Cash flows (In thousands) Thirteen WeeksEnded May 4, April 28, 2013 2012 Cash Flows From Operating Activities: Net income $10,937 $8,742 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense 2,237 1,607 Stock-based compensation expense 990 734 Excess tax benefit from stock-based compensation (2,373) (1,014) Loss on sale of assets 110 7 Amortization of debt issuance costs 73 73 Deferred income taxes (597) (1,352) Changes in assets and liabilities: Accounts receivable (5,141) (4,045) Inventories (4,281) (3,180) Prepaid expenses and other assets 93 (245) Accounts payable 265 1,172 Accrued liabilities 5,717 2,579 Deferred and accrued rents 4,059 4,355 Net cash provided by operating activities 12,089 9,433 Cash Flows Used in Investing Activities: Purchase of property and equipment (8,517) (6,620) Net cash used in investing activities (8,517) (6,620) Cash Flows Provided by (Used in) Financing Activities: Repayments of borrowings under the revolving credit — (10,000) facility Proceeds from the exercise of stock options 221 348 Taxes paid related to net settlement of equity awards (2,280) — Excess tax benefit from stock-based compensation 2,373 1,014 Net cash provided by (used in) financing activities 314 (8,638) Net increase (decrease) in cash and cash equivalents 3,886 (5,825) Cash and cash equivalents, beginning of year 29,877 14,046 Cash and cash equivalents, end of period $33,763 $8,221 Supplemental Disclosures of Cash Flow Information: Cash paid for income taxes $2,372 $4,661 Interest paid $40 $210 CONTACT: Investors ICR, Inc. Jean Fontana 646-277-1214 Company Randi Sonenshein, Vice President, Finance and Investor Relations 832-494-2250 company logo
francesca's Reports First Fiscal Quarter 2013 Financial Results
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