Posted: Sep 4, 2013 7:54 AM
Updated: Sep 4, 2013 7:54 AM
HOUSTON (AP) Francesca's said Wednesday that its second-quarter net income rose 15 percent as sales of jewelry, clothing and accessories increased.
But the retailer said that its quarterly sales were weaker than expected because of a tough year-ago comparison, declining traffic during the latter part of the quarter and the absence of a dominant fashion trend. Its quarterly performance fell short of Wall Street's view.
CEO Neill Davis cautioned that traffic will likely remain a challenge into the third quarter, and Francesca's cut its 2013 guidance. Its third-quarter outlook also came in below analysts' expectations.
Shares slid more than 20 percent in morning trading.
For the period ended Aug. 3, the company earned $14.6 million, or 33 cents per share. A year earlier it earned $12.7 million, or 28 cents per share.
Analysts polled by FactSet expected higher earnings of 35 cents per share.
Revenue climbed 17 percent to $89.6 million from $76.4 million, benefiting from new store openings and increased sales of jewelry, clothes and accessories. But Wall Street was looking for more, predicting revenue of $94.5 million.
Revenue at stores open at least a year dipped 1 percent. Francesca's said that the results include direct-to-consumer sales. This metric is a key indicator of a retailer's health because it excludes results from stores recently opened or closed.
Francesca's stock dropped $5.27, or 21.9 percent, to $18.75 in morning trading.
The company now expects full-year adjusted earnings of $1.10 to $1.16 per share with revenue in a range of $343 million to $349.5 million. Its previous forecast was for adjusted earnings of $1.27 to $1.30 per share on revenue between $365 million and $370 million.
Analysts predict full-year earnings of $1.29 per share on revenue of $368.7 million.
For the third quarter, Francesca's Holdings Corp. anticipates earnings of 19 cents to 21 cents per share on revenue of $78 million to $80 million. Wall Street is calling for earnings of 30 cents per share on revenue of $89.9 million.
The Houston-based company also said that its board approved a $100 million share buyback that will start immediately. The buyback has no expiration date.
Francesca's currently runs 440 stores in 44 states.