Francesca’s Holdings Corp. will permanently shutter about half of its brick-and-mortar fleet as it exits bankruptcy proceedings.
A judge in the United States Bankruptcy Court for the District of Delaware approved the sale of substantially all of the retailer’s assets to an affiliate of investment firm TerraMar Capital LLC and financial services firm Tiger Capital Group LLC, which is one of its lenders.
The two firms were the stalking horse bidders in an auction conducted early this month and agreed to a purchase price of $18 million in cash, subject to certain adjustments, plus a promissory note for $1.25 million and the assumption of about $7.74 million in liabilities.
As part of the plan, TerraMar and Tiger will preserve the business as a going concern with at least 275 Francesca’s outposts. The chain currently operates 551 boutiques, with the majority of them located in malls across the country. The deal is expected to close by next week.
In mid-November, Francesca’s announced intentions to close 137 of its roughly 700 locations at the time by the end of January. Then, just last month, it put another 97 stores that were “underperforming relative to lease costs” on the chopping block. (Some of those 97 outposts are still in the midst of the store closing process.)
Over the past 10 months, the retailer has taken steps to reduce expenses and manage its cash flow following the temporary shutdown of its physical fleet. It also furloughed “substantially all” of corporate and store workers in mid-April and reduced the base salaries of its senior leadership team.
Although it had been wading through business challenges well before the COVID-19 pandemic took hold in the U.S., the Houston-based chain said that it planned to use Chapter 11 proceedings to implement a sale process focused on the company’s core retail locations as well as its “promising” digital expansion and new brand launches. (It had been evaluating strategic alternatives since 2019.) It launched a new iOS app last summer, while an Android app followed ahead of the holiday season as it recorded boost in e-commerce sales amid the health crisis.