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| 8-K - FORM 8-K - FHC Holdings Corp | v338635_8k.htm |
Francesca's Reports Fourth Quarter and Fiscal Year 2012 Financial Results
Fourth quarter net sales increased 40.6% to $86.7 million
Fourth quarter comparable boutique sales increased 9.2%
Fourth quarter diluted earnings per share increased 73.7% to $0.33
HOUSTON, TEXAS — March 19, 2013 — Francesca’s Holdings Corporation (NASDAQ: FRAN) today reported a 73.7% increase in earnings per diluted share of $0.33 for the fourth quarter ended February 2, 2013 compared to $0.19 per diluted share for the same quarter last year. Net sales in the fourth quarter were $86.7 million, an increase of 40.6% compared with net sales of $61.7 million during the same period in fiscal 2011. Net earnings of $14.9 million increased 78.0% compared to net earnings of $8.4 million for the same quarter last year.
Neill Davis, Chief Executive Officer, commented, “We delivered another quarter of strong growth and profitability as the company’s differentiated shopping experience continues to resonate with new and existing customers. We are well positioned with the teams and capabilities to continue expansion of our boutique base, increase boutique productivity and further develop our direct-to-customer presence. Looking ahead, we continue our growth trajectory with 80 openings for fiscal 2013, reaching the milestone of over 400 locations by the end of the first quarter.”
Francesca’s follows the NRF reporting calendar, which included an extra week in the fourth quarter of fiscal 2012 (the 53rd week). In the 53rd week, the Company had net sales of approximately $3.9 million, representing an approximate $0.03 increase to earnings per diluted share for both the quarter and fiscal year. The 53rd week is not included in comparable boutique sales calculations.
FOURTH QUARTER SUMMARY
Net sales for the fourteen weeks increased 40.6% to $86.7 million. Net sales increases were driven by a 9.2% comparable boutique sales increase following a 14.7% increase in the prior year period and 77 new boutique openings since the end of the prior year quarter. The comparable sales increase was driven primarily by increased transactions. In addition, the increase in net sales was driven by strong growth in our clothing and jewelry categories.
Gross profit, as a percentage of net sales, increased 92 basis points to 53.37%. The increase was attributable to leverage of occupancy costs on increased sales.
Selling, general and administrative (SG&A) expenses increased 20.8% to $21.6 million. As a percentage of net sales, SG&A decreased 408 basis points to 24.91%, primarily attributable to leverage on increased sales.
Income from operations for the quarter increased 70.6% to $24.7 million and as a percentage of net sales, increased 500 basis points to 28.45%.
FULL YEAR RESULTS
Net sales increased 45.2% to $296.4 million. Net sales increases were driven by a 14.9% comparable boutique sales increase and 77 new boutique openings since the end of the prior year. The comparable sales increase was driven primarily by increased transactions.
Net income for 53 weeks ending February 2, 2013 was $47.1 million or $1.05 per diluted share compared to net income for 52 weeks ending January 28, 2012 of $22.5 million, or $0.52 per diluted share. Adjusted net income for 53 weeks ending February 2, 2013 was $47.7 million, or $1.06 per diluted share, after excluding $479,000 pretax charges ($291,000 net of tax) related to a secondary equity offering, $264,000 pretax charges ($160,000 net of tax) related to stock option acceleration expenses and $342,000 pretax charges ($208,000 net of tax) related to the relocation of our headquarters and distribution facilities. Adjusted net income for 52 weeks full year 2011 was $25.2 million, or $0.58 per diluted share, after excluding charges of $1.6 million pretax ($958,000 net of tax) related to the early termination of the company’s prior senior secured credit facility, $2.3 million pretax ($1.4 million net of tax) of option acceleration costs, and $611,000 pretax ($368,000 net of tax) related to a secondary equity offering.
Balance Sheet Summary
Total inventories at the end of the quarter increased by $4.6 million to $19.0 million, a 32% increase versus the prior comparable period. Inventory per boutique increased 4%.
Total cash and cash equivalents at quarter end were $29.9 million at the quarter and year-end compared to $14.0 million in the prior year period.
First Quarter and Full Year 2013 Guidance
For the first quarter ending May 4, 2013, net sales are expected to be between $79.5 million and $80.5 million assuming a 4%-5% comparable boutique sales increase on top of the prior year increase of 15.5% and the opening of approximately 50 additional new boutiques. Earnings per diluted share are expected to be in the range of $0.25 to $0.26 an increase of 25.0% to 30.0% over the prior year diluted earnings per share of $0.20.
For the full fiscal 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% comparable boutique sales increase and the opening of 80 new boutiques. Earnings per diluted share are expected to be in the range of $1.27 to $1.30 an increase of 23.3% to 26.2% over the 52-week prior year adjusted diluted earnings per share.
The number of diluted average shares outstanding is expected to be 44.9 million for both the first quarter and full year. The effective tax rate is estimated to be 39.3% for both the first quarter and full year. Capital expenditures are planned in a range of $22.0 to $25.0 million.
Conference Call Information
A conference call to discuss fourth quarter and fiscal year 2012 results is scheduled for March 19, 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 April 19, 2013. To access the telephone replay, listeners should dial (877) 870-5176. The access code for the replay is 5021814. 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 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 2012 diluted earnings per share and actual results on a comparable basis with our quarterly and fiscal year 2011 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 and our most recent Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on March 21, 2012 and December 7, 2012, respectively. 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. francesca's® appeals to the 18-35 year-old, fashion conscious, female customers, although the Company finds that women of all ages are attracted to the eclectic and sophisticated merchandise selection and boutique setting. francesca's® boutiques carry a broad selection but limited quantities of individual styles and new merchandise is introduced five days a week. For additional information on francesca's®, please visit www.francescas.com
| CONTACT: | |
| Investors | |
| ICR, Inc. | Company |
| Jean Fontana | Randi Sonenshein, Vice President, Finance and Investor Relations |
| 646-277-1214 | 832-494-2250 |
Francesca's Holdings Corporation
Consolidated Statements of Operations
| For the Fourteen Weeks Ended February 2, 2013 | For the Thirteen Weeks Ended January 28, 2012 | Variance | ||||||||||||||||||||||||||
| In Dollars | As a % of Net Sales(1) | In Dollars | As a % of Net Sales(1) | In Dollars | % | As a % of Net Sales(1) | ||||||||||||||||||||||
| (in thousands, except percentages) | ||||||||||||||||||||||||||||
| Net sales | $ | 86,700 | 100.00 | % | $ | 61,652 | 100.00 | % | $ | 25,048 | 40.6 | % | 0.00 | % | ||||||||||||||
| Cost of goods sold and occupancy costs | 40,430 | 46.63 | % | 29,317 | 47.55 | % | 11,113 | 37.9 | % | (0.92 | )% | |||||||||||||||||
| Gross profit | 46,270 | 53.37 | % | 32,335 | 52.45 | % | 13,935 | 43.1 | % | 0.92 | % | |||||||||||||||||
| Selling, general and administrative expenses | 21,600 | 24.91 | % | 17,875 | 28.99 | % | 3,725 | 20.8 | % | (4.08 | )% | |||||||||||||||||
| Income from operations | 24,670 | 28.45 | % | 14,460 | 23.45 | % | 10,210 | 70.6 | % | 5.00 | % | |||||||||||||||||
| Interest income (expense) | (125 | ) | (0.14 | )% | (339 | ) | (0.55 | )% | 214 | (63.1 | )% | 0.41 | % | |||||||||||||||
| Other income (expense) | (27 | ) | (0.03 | )% | 36 | 0.06 | % | (63 | ) | (175.0 | )% | (0.09 | )% | |||||||||||||||
| Income before income tax expense | 24,518 | 28.28 | % | 14,157 | 22.96 | % | 10,361 | 73.2 | % | 5.32 | % | |||||||||||||||||
| Income tax expense | 9,648 | 11.13 | % | 5,804 | 9.41 | % | 3,844 | 66.2 | % | 1.72 | % | |||||||||||||||||
| Net income | $ | 14,870 | 17.15 | % | $ | 8,353 | 13.55 | % | $ | 6,517 | 78.0 | % | 3.60 | % | ||||||||||||||
| Diluted earnings per common share | $ | 0.33 | $ | 0.19 | ||||||||||||||||||||||||
| Weighted average diluted shares outstanding | 44,858 | 44,547 | ||||||||||||||||||||||||||
| Comparable boutique sales increase | 9.2 | % | 14.7 | % | ||||||||||||||||||||||||
| Fiscal Year Ended | ||||||||||||||||||||||||||||
| February 2, 2013 | January 28, 2012 | Variance | ||||||||||||||||||||||||||
| In Dollars | As a % of Net Sales(1) | In Dollars | As a % of Net Sales(1) | In Dollars | % | As a % of Net Sales(1) | ||||||||||||||||||||||
| (in thousands, except percentages) | ||||||||||||||||||||||||||||
| Net sales | $ | 296,373 | 100.00 | % | $ | 204,158 | 100.00 | % | $ | 92,215 | 45.2 | % | 0.00 | % | ||||||||||||||
| Cost of goods sold and occupancy costs | 137,873 | 46.52 | % | 97,365 | 47.69 | % | 40,508 | 41.6 | % | (1.17 | )% | |||||||||||||||||
| Gross profit | 158,500 | 53.48 | % | 106,793 | 52.31 | % | 51,707 | 48.4 | % | 1.17 | % | |||||||||||||||||
| Selling, general and administrative expenses | 80,560 | 27.18 | % | 63,262 | 30.99 | % | 17,298 | 27.3 | % | (3.81 | )% | |||||||||||||||||
| Income from operations | 77,940 | 26.30 | % | 43,531 | 21.32 | % | 34,409 | 79.0 | % | 4.98 | % | |||||||||||||||||
| Interest income (expense) | (672 | ) | (0.23 | )% | (4,868 | ) | (2.38 | )% | 4,196 | (86.2 | )% | 2.15 | % | |||||||||||||||
| Loss on early extinguishment of debt | - | 0.00 | % | (1,591 | ) | (0.78 | )% | 1,591 | (100.0 | )% | 0.78 | % | ||||||||||||||||
| Other income (expense) | 230 | 0.08 | % | 284 | 0.14 | % | (54 | ) | (19.0 | )% | (0.06 | )% | ||||||||||||||||
| Income before income tax expense | 77,498 | 26.15 | % | 37,356 | 18.30 | % | 40,142 | 107.5 | % | 7.85 | % | |||||||||||||||||
| Income tax expense | 30,437 | 10.27 | % | 14,855 | 7.28 | % | 15,582 | 104.9 | % | 2.99 | % | |||||||||||||||||
| Net income | $ | 47,061 | 15.88 | % | $ | 22,501 | 11.02 | % | $ | 24,560 | 109.2 | % | 4.86 | % | ||||||||||||||
| Diluted earnings per share | $ | 1.05 | $ | 0.52 | ||||||||||||||||||||||||
| Weighted average diluted shares outstanding | 44,807 | 42,948 | ||||||||||||||||||||||||||
| Comparable boutique sales increase | 14.9 | % | 10.4 | % | ||||||||||||||||||||||||
| (1) | Percentage totals in the above tables may not equal the sum of the components due to rounding. |
Francesca’s Holdings Corporation
Consolidated Balance Sheets
(In thousands)
| February 2, 2013 | January 28, 2012 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 29,877 | $ | 14,046 | ||||
| Accounts receivable | 1,925 | 2,156 | ||||||
| Inventories | 19,049 | 14,462 | ||||||
| Deferred income taxes | 3,506 | 2,352 | ||||||
| Prepaid expenses and other current assets | 4,749 | 3,025 | ||||||
| Total current assets | 59,106 | 36,041 | ||||||
| Property and equipment, net | 49,559 | 33,199 | ||||||
| Deferred income taxes | 2,357 | 952 | ||||||
| Other assets, net | 1,573 | 2,120 | ||||||
| TOTAL ASSETS | $ | 112,595 | $ | 72,312 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 7,779 | $ | 8,627 | ||||
| Accrued liabilities | 10,667 | 9,893 | ||||||
| Total current liabilities | 18,446 | 18,520 | ||||||
| Deferred and accrued rents | 22,092 | 14,890 | ||||||
| Long-term debt | - | 22,000 | ||||||
| Total liabilities | 40,538 | 55,410 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders’ equity (deficit): | ||||||||
| Common stock-$.01 par value, 80.0 million shares authorized, 43.9 million, and 43.5 million shares issued and outstanding at February 2, 2013 and January 28, 2012, respectively | 439 | 435 | ||||||
| Additional paid-in capital | 85,161 | 77,071 | ||||||
| Accumulated deficit | (13,543 | ) | (60,604 | ) | ||||
| Total shareholders’ equity | 72,057 | 16,902 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 112,595 | $ | 72,312 | ||||
Francesca’s Holdings Corporation
Consolidated Statements of Cash flows
(In thousands)
| For the Fiscal Year Ended | ||||||||||||
| February 2, 2013 | January 28, 2012 | January 29, 2011 | ||||||||||
| Cash Flows Provided by Operating Activities: | ||||||||||||
| Net income | $ | 47,061 | $ | 22,501 | $ | 16,895 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Depreciation and amortization | 7,151 | 4,936 | 2,377 | |||||||||
| Stock-based compensation expense | 3,599 | 4,671 | 2,400 | |||||||||
| Excess tax benefit from stock-based compensation | (2,296 | ) | (449 | ) | (1,757 | ) | ||||||
| Loss on sale of assets | 188 | 23 | 25 | |||||||||
| Loss on early extinguishment of debt | - | 1,591 | - | |||||||||
| Amortization of debt issuance costs | 299 | 537 | 158 | |||||||||
| Deferred income taxes | (2,559 | ) | 721 | (2,685 | ) | |||||||
| Changes in assets and liabilities: | ||||||||||||
| Accounts receivables | 231 | 1,898 | (3,557 | ) | ||||||||
| Inventories | (4,587 | ) | (2,593 | ) | (5,631 | ) | ||||||
| Prepaid expenses and other assets | (1,512 | ) | (445 | ) | (1,499 | ) | ||||||
| Accounts payable | (848 | ) | 2,481 | 3,443 | ||||||||
| Accrued liabilities | 3,069 | 3,932 | 4,852 | |||||||||
| Deferred and accrued rents | 7,203 | 6,667 | 5,999 | |||||||||
| Net cash provided by operating activities | 56,999 | 46,471 | 21,020 | |||||||||
| Cash Flows Used in Investing Activities: | ||||||||||||
| Purchase of property and equipment | (23,663 | ) | (16,894 | ) | (16,208 | ) | ||||||
| Other | - | 36 | - | |||||||||
| Net cash used in investing activities | (23,663 | ) | (16,858 | ) | (16,208 | ) | ||||||
| Cash Flows Used in Financing Activities: | ||||||||||||
| Proceeds from issuance of stock in initial public offering, net of costs | - | 44,245 | - | |||||||||
| Proceeds from borrowings under the revolving credit facility | - | 41,000 | - | |||||||||
| Proceeds from borrowings under the senior secured credit facility | - | - | 95,000 | |||||||||
| Repayment of borrowings under the revolving credit facility | (22,000 | ) | (19,000 | ) | - | |||||||
| Repayment of borrowings under the senior secured credit facility | - | (93,813 | ) | (1,187 | ) | |||||||
| Dividends | - | - | (100,000 | ) | ||||||||
| Payment of debt issuance costs | - | (1,468 | ) | (2,137 | ) | |||||||
| Proceeds from the exercise of stock options | 2,199 | 504 | 504 | |||||||||
| Excess tax benefit from stock-based compensation | 2,296 | 449 | 1,757 | |||||||||
| Net cash used in financing activities | (17,505 | ) | (28,083 | ) | (6,063 | ) | ||||||
| Net increase (decrease) in cash and cash equivalents | 15,831 | 1,530 | (1,251 | ) | ||||||||
| Cash and cash equivalents, beginning of year | 14,046 | 12,516 | 13,767 | |||||||||
| Cash and cash equivalents, end of year | $ | 29,877 | $ | 14,046 | $ | 12,516 | ||||||
| Supplemental Disclosures of Cash Flow Information: | ||||||||||||
| Cash paid for income taxes | $ | 32,405 | $ | 8,971 | $ | 13,509 | ||||||
| Interest paid | 448 | 5,569 | 163 | |||||||||