Francesca's Shares Plunge on Faded Earnings Outlook

Wednesday, 04 Sep 2013 05:07 PM

 

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Francesca’s Holdings Corp. shares tumbled the most ever after the women’s boutique operator lowered its full-year profit forecast and said customer traffic will remain low.

The shares slid 26 percent to $17.79 at Wednesday's close in New York, the most since the company’s initial public offering in July 2011. The Houston-based retailer said earnings for its most recent quarter were 33 cents a share, below the 35-cent average of analysts’ estimates compiled by Bloomberg.

While the company boasts the U.S. retail industry’s fastest growth rate by opening stores, sales at existing locations are now dropping. Same-store sales, including online transactions, fell 1 percent in the second quarter, compared with a 21 percent increase a year earlier. The retailer was hurt by the lack of a dominant apparel fashion trend in the quarter and lower levels of customer traffic, Chief Executive Officer Neill Davis said on a conference call.

“While we anticipate challenges in the near-term given the difficult and choppy traffic trends, we will remain confident about the longer term prospects for our business,” Davis said.

Francesca’s lowered its estimates for its full-year profit to as much as $1.16 a share from a maximum of $1.30, excluding some items. Analysts anticipated $1.28.

Retailers from Macy’s Inc. to Wal-Mart Stores Inc. have reported results that trailed expectations for their most recent quarters. Macy’s last month posted its first sales drop since 2010 and profit trailed analysts’ estimates for the first time since 2007. Wal-Mart said that earnings for the rest of the year would be less than it previously expected as consumers were hesitant to make discretionary purchases.

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