Why Francesca's Holdings Corp Shares Fell
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of women's accessories and clothing store chain Francesca's Holdings Corp sank 10% today after its quarterly results and outlook disappointed Wall Street.
So what: The stock has plunged in recent months on signs of weakening demand, and today's third-quarter results -- earnings fell 20% -- coupled with downbeat guidance only reinforce those concerns. While revenue during the quarter increased 10.6%, same-store sales fell 3% and gross margin declined 190 basis points, suggesting that the company's competitive position is weakening rather rapidly.
Now what: Management now sees fourth-quarter earnings per share of $0.25-$0.29 on revenue of $90 million-$95 million, well below Wall Street's estimate of $0.34 and $98.3 million. "We are focused on managing through the tough retail environment, and committed to operating our distinctive business with a long-term vision," CEO Neill Davis reassured investors. "Our planning for the Spring 2014 season is well under way and I believe the fashion themes represented in our offerings will resonate with our customers, particularly in categories lacking newness in prior seasons." With the stock off about 50% from its 52-week highs and trading at a forward P/E of roughly 10, now might even be an opportune time to start looking into Francesca's longer-term prospects.
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The article Why Francesca's Holdings Corp Shares Fell originally appeared on Fool.com.Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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