The company reported net income of $1.8 million, or $0.61 per share, compared to $0.5 million, or $0.16 per share, in the year-ago period. Adjusted net income was $2.1 million, or $0.72 per share.
Gross profit, as a percent of net
sales, decreased to 38.2% from 39% in the prior year quarter, driven by lower
merchandise margins due to deeper markdowns on legacy products and deleveraging
of occupancy costs as a result of lower sales.
SG&A expenses dropped 10% to $39.1 million. The company realized material savings during the quarter through a number of cost reduction initiatives it has been executing since the beginning of the year.
During the quarter, Francesca’s opened
one new boutique and closed five boutiques, bringing the total boutique count
to 718 at the end of the period.
At quarter-end, the company had $30.9
million of inventory
on hand compared to $31.9
million in the same
period last year. Average ending inventory per boutique was flat at $43,000 versus the prior-year period.
Last month, activist investor Cross River Management disclosed a 22% stake in Francesca’s and stated they were engaged with the board and management, according to a report by MarketWatch.