After COVID-19 Trampled Its Sales, Is Business Looking Up for Francesca’s?

Despite dismal sales in the first quarter, business might be looking up for struggling Francesca’s Holdings Corp.

The apparel and accessories retailer yesterday reported a 50% plunge in revenues to $43.8 million in the three months ended May 2. However, it forecasts comps for the second quarter, which wraps up on Aug. 1, to take a much lighter hit: Sales are expected in the range of $67 million to $71 million, assuming a comparable sales decrease of 16% to 11%.

“Our business model enables us to respond quickly to shifts in consumer demand so that we may manage our inventory flow to align with consumer demand,” president and CEO Andrew Clarke said in a statement. “While we expect the retail environment to remain challenging as a result of uncertainty related to COVID-19, we believe we are on the right path forward.”

Government-mandated restrictions to help stem the spread of the coronavirus led Francesca’s boutiques to shut down starting March 25 through the end of the first quarter. The company posted an adjusted net loss of $28.4 million, or a loss of $9.73 per share, compared with the prior year’s adjusted net loss of $8.2 million, or $2.84 per share.

As of today, the Houston-based chain has reopened 674 of its 702 locations. Most of them continue to operate at reduced capacity and hours in accordance with local regulations. (It added that it has “substantially completed” negotiations with landlords to either abate or defer lease payments for the months of April, May and June.)

“Sales of reopened boutiques are trending within our expectations, with higher conversion largely offsetting lower traffic trends,” Clarke explained. “With an increased focus on boutique promotions, as part of our phased reopening plans, we have cleared through the majority of our aged product, which we believe will place us in a better inventory position heading into the fall season.”

The financial report comes less than two weeks after Francesca’s issued a warning that it could go bankrupt. In a filing with the Securities and Exchange Commission, the company announced that coronavirus-induced shutdowns had led to significant declines in its comparable sales, net revenues and gross profits. It expressed a need to obtain additional financing to keep its business up and running or enter into Chapter 11 protection.

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