Francesca's Q3 Profit Down, Cuts FY Outlook; Stock Down

(RTTNews) - Apparel retailer Francesca's Holdings Corp. (FRAN) reported net income of $8.7 million or $0.20 per share for the third quarter of 2013, down from $10.8 million or $0.24 per share in the third quarter of 2012.

Income from operations for the quarter decreased 18% to $14.6 million compared to $17.7 million in the prior year quarter. Excluding relocation charge, adjusted income from operations for the third quarter 2012 was $18.1 million.

Net sales for the thirteen weeks increased 11% to $79.6 million driven by 87 new boutique openings since the prior year quarter. Performance was strongest in accessories, outpacing increases in apparel and jewelry, and a decline in gifts.

Comparable sales, including direct-to-consumer sales, decreased 3%, as compared to a 17% increase in the prior year quarter. Comparable transactions decreased 3%, with a flat average transaction size. Direct-to-consumer sales increased 87% versus the prior year quarter driven by increases in site traffic, conversion rates, and average transaction values.

Analysts polled by Thomson Reuters expected the company to report earnings of $0.20 per share and revenues of $79.11 million for the quarter. Analysts' estimates typically exclude special items.

For the fourth quarter ending February 1, 2014, net sales are expected to be between $90.0 million and $95.0 million assuming a -8% to -3% change in comparable sales including our direct-to-consumer business. This compares to the prior year comparable sales increase of 10%. Earnings per diluted share are expected to be in the range of $0.25 to $0.29.

Analysts expect the company to report earnings of $0.34 per share and revenues of $98.34 million for the fourth-quarter.

The Company plans to open five new boutiques during the fourth quarter as compared to one boutique opened during the prior year quarter.

For the full year ending February 1, 2014, net sales are expected to be in the range of $338.2 million to $343.2 million assuming a -3% to -1% decrease in comparable sales including our direct-to-consumer business. This compares to the prior year comparable sales increase of 16%. Adjusted earnings per share are expected to be in the range of $1.03 to $1.07 which excludes $0.6 million or $0.01 per share net of tax charge related to a secondary equity offering during the first quarter. Analysts expect the company to report earnings of $1.13 per share and revenues of $346.02 million for fiscal year.

While announcing the second-quarter result, the company had expected net sales for the full year ending February 1, 2014 to be in the range of $343.0 million to $349.5 million assuming a -2% decrease to flat comparable sales including direct-to-consumer, compared to the prior year comparable sales increase of 16%, and the opening of 87 additional boutiques, as compared to 77 additional boutiques in fiscal 2012. Adjusted earnings per share were likely to be in the range of $1.10 to $1.16, excluding $0.6 million net of tax charge related to a secondary equity offering.

The company plans to open 91 boutiques in the fiscal 2013, as compared to 77 in fiscal 2012.

In Thursday's regular trading session, FRAN is currently trading at $16.31, down $1.79 or 9.89 percent.