Francesca’s Plunges After CEO Leaves Abruptly, Sparking Concernsby
Francesca’s Holdings Corp. shares plunged as much as 31 percent after the departure of Chief Executive Officer Michael Barnes, a surprise move that throws the retail chain’s long-term strategy into doubt.
Barnes is leaving for “personal reasons,” effective immediately, the Houston-based company said in a statement Tuesday. Board member Richard Kunes -- a former Estee Lauder Cos. executive -- was named interim chairman, president and CEO in Barnes’s place.
The move followed a disappointing quarter for the apparel retailer, which caters to young women. Francesca’s posted preliminary earnings of 17 cents in the first quarter, missing the 20 cents estimated by analysts. The company is in the middle of an effort called “Vision 2020” to overhaul the business, but Barnes’s exit -- along with other recent management changes -- have raised concerns about whether that progress will continue.
“We were banking on Mike Barnes to create a sustainable platform,” John Kernan, an analyst at Cowen & Co., said in a report. “The CEO, CFO and CMO positions have all seen turnover within the last 12 months, which creates execution risk and uncertainty.”
The shares fell as low as $10.34 on Tuesday in New York, their biggest intraday decline since they began trading in 2011. Even before the tumble, the stock was down 14 percent this year.
Kernan downgraded the shares to a neutral rating from the equivalent of buy. William Blair & Co. analyst Amy Noblin also cut her recommendation on the stock to neutral.
The Vision 2020 plan was designed to revamp the retailer’s merchandise and marketing, improve its stores and expand its e-commerce selection.