UPDATED FRAN DD
SHARE RELATED ITEMS
Shares Outstanding (Million) ................... 2.95
Float (Million) ................................ 2.79
Redgrave (Martyn R) ...... 22,708 .... 0.77% OS ... 6/28/19
Emmett (Richard J) ...... 21,374 .... 0.72% OS ... 6/28/19
Kunes(Richard W) ...... 20,576 .... 0.70% OS ... 6/28/19
Toulantis (Marie J) ...... 20,124 .... 0.68% OS ... 6/28/19
Bender (Patricia A) ...... 20,033 .... 0.68% OS ... 6/28/19
O Leary (Joseph Denis) ... 19,708 .... 0.67% OS ... 6/28/19
INSTITUTIONAL SHAREHOLDER CONCENTRATION
COMMITTEE CHARTERS ..... % O/S ........ Shares
Top 10 Inst. ....................... 55.22 .......... 1,628,959
Top 20 Inst. ...................... 64.51 ........... 1,903,167
Top 50 Inst. ...................... 71.30 .......... 2,103,442
Total Inst. ....................... 72.03 .......... 2,125,107
Latest news of Importance
Francesca’s® Announces Reporting Date for Second Quarter Fiscal Year 2019 Financial Results http://www.globenewswire.com/news-release/2019/08/27/1907402/0/en/francesca-s-Announces-Reporting-Date-for-Second-Quarter-Fiscal-Year-2019-Financial-Results.html
Francesca's® Announces $10 Million Term Loan Agreement Completion Of Strategic Alternatives Review https://www.thestreet.com/press-releases/francesca-s-reg-announces-10-million-term-loan-agreement-nbsp-completion-of-strategic-alternatives-review-15056347
Francesca's stockholder rights plan announced
(Poison Pill Takeover Hostile Protection) https://www.marketwatch.com/story/francescas-shares-pop-after-stockholder-rights-plan-announced-2019-08-02?mod=mw_quote_news
Francesca's shares soar after activist investor reveals 22% stake https://www.marketwatch.com/story/francescas-shares-soar-after-activist-investor-reveals-22-stake-2019-08-06?mod=mw_quote_news
Highlights from June CC on turnaround plan being executed.
One such focus has been the improvement of E commerce helped by Francesca's Ambassadors (influencers) who have traveled the country hitting major music events around the country among other event, Country Music Awards in Nashville, Lallapalooza in Chicago.
Francesca's Instagram which has grown exponentially over the summer to 456K followers https://www.instagram.com/francescas/?hl=en
New E commerce Website https://www.francescas.com/
CC Speaking Michael D. Prendergast, Francesca's Holdings Corporation - Interim CEO
I'm pleased to be here today to discuss the rapid progress we are making in our turnaround strategy for francesca's. With over 20 years of operational experience in the retail industry and after evaluating all aspects of the business, I can confidently say that francesca's is well positioned within the new retail landscape to succeed. We have started implementation of a company-wide turnaround strategy that we believe will return the company to profitable growth.
Before sharing details of the plan with you, I would like to first discuss some of the strategies and tactics that have driven our recent results. Starting in January 2019, we executed a system-wide analysis to determine overall operating strengths, weaknesses and opportunities in the business, its overall strategy and its operating model. Upon evaluating the business, we quickly recognized Francesca's unique competitive position.
Recent sub-optimal execution and a lack of focus on these key core success principles have caused significant comparable sales declines in recent years. Comparable sales declined 14% in fiscal 2018 following an 11% decline in 2017. During the fourth quarter period, comparable sales declined 14% and adjusted operating loss was $500,000 compared to operating income of $10.4 million in the same period last year.
Based on our observations, we attribute the weak performance over the last 2 years primarily to a shift away from core activities that historically drove successful results. The merchandising, buying and planning teams began to operate a more complicated process that slowed their reaction time to read and react to product trends in the market. Multiple reporting and personnel layers were built into the organization, for example, the merchandising and buying departments, which slowed the overall process. In addition, based on the strategy to move away from operating a demand-based product assortment to our customer, product lead times were lengthened which mitigated the ability to react quickly to changing fashion trends. Our product team selections of product were misaligned with consumer demand, both from a fashion viewpoint and classification and sub-classification structure architecture.
In short, the company was not effectively operating as a demand-based fast fashion model. The increased layers in not only the merchandising and buying areas, combined with higher payroll at the boutique level, also led to a bloated corporate expense structure. Finally, while the company was aggressively growing the boutique base, there was not disciplined management of the existing leases.
Having identified the missteps in execution over the last 3 months, we have developed and started implementation and execution of a strategic plan that we believe will return the company to positive sales, cash flow and operating income performance. With just 3 months underway, we are already beginning to see the impact of our initiatives.
First, we have made fundamental changes in the business to deliver -- to ensure our merchandise assortment is driven by and aligned to customer demand. These changes are enhancing the merchant team's chances of success and have returned the operations to some of the previous activities that made it successful. We accomplished this by instituting merchandising policies that enable us to more swiftly react to consumer demands by transitioning to more nimble, less complex processes, instituting advanced data and analytics around decision making and shortening lead times with our vendors. In addition, refocusing teams on market trends and consumer demands. Our merchandise assortment will be guided by deliberate category and subcategory hierarchy focused on 3 types of merchandise: fashion, seasonal and core, to ensure that our merchandise offerings are balanced and relevant to our customers. We will maintain a well-curated broad and shallow assortment within this hierarchy.
Second, we are reinstituting demand-based fast fashion principles in our merchandise planning and buying processes that will enable a steady flow of on-trend merchandise into our boutiques and e-commerce site which we believe will drive improved sales. The following strategies are designed to help us better implement those principles.
Number one, we are updating and adding robust analytics to our planning and buying processes in order to more quickly react to fashion trends and respond to high-demand merchandise with our customers.
Number two, we are increasing the flexibility of our planning such that a greater portion of our merchandise will be open to buy in season, enabling our style selection and inventory investments to better respond to customer demand. We will keep 50% of our open-to-buy available to chase current fashion trends as well as ensure we have the right amount of core inventory on hand. We are working closely with our key fast fashion vendors to further reduce lead times to approximately 4 weeks to again ensure we can keep pace with changing trends and customer demand.
And number three, we are activating a wide-scale testing strategy to help evaluate promotional strategies in-store with the goal to expand impactful wins to all stores.
The success of implementing these fast fashion merchandising principles is clearly illustrated in our recent NEW + NOW initiative launched in April. This product selection and offering reflects our return to fast fashion merchandise planning and buying principles. Chasing products based on store data, we recently purchased 30,000 units within a 2-week lead time and delivered it to stores which resulted in a 50% sell-through in the first week of launch. Our ability to drive these results in such a short period indicated the impact of the changes we have been implementing.
By the second half of this year, both our merchandising, buying and planning will be completely converted to a demand-based, fast fashion model which will position us to drive improved conversion and traffic. To lead this effort, we have appointed an Interim General Merchandise Manager to oversee this transition and ensure the execution of the go-forward strategy.
Third, we have taken aggressive steps to reduce costs and right-size the expense structure. The cost structure of the organization outpaced the sales levels and was saddled with added layers within various business functions. We have instituted corporate overhead reductions that are expected to result in $8 million in annualized savings before cost to achieve while lower third party-related costs are expected to yield additional savings. We plan to continue to look for further efficiencies in selling, general and administrative costs in the remainder of fiscal 2019. For example, in February 2019, we instituted robust and detailed expense controls and review processes. We believe these actions will have a direct impact on our profitability in both the short and long term.
Fourth, we are taking steps to improve the productivity of our boutique teams. By monitoring our boutique labor and sales metrics, we can better utilize our sales associates' time without sacrificing the customer experience. For example, certain tasks that were previously performed by our associates after store hours will now be completed when our boutiques are open but during the windows that our data shows that the boutique traffic is lighter. Additionally, our use of an enhanced scheduling tool that will be continuously reviewed and refined should better align boutique payroll expense to sales levels. We expect the rationalization of boutique payroll to generate an additional $7.5 million in annualized savings.
Fifth, turning to real estate. Simultaneous to the boutique productivity deterioration, the store continued to expand without adequate management of the existing fleet. As such, we are focused on optimizing the lease expense structure for our existing boutiques with an emphasis towards calibrating occupancy cost with sales levels and negotiating with landlords for early lease terminations or rent concessions for underperforming boutiques and early lease extensions for our best-performing boutiques. We are also working diligently to evaluate boutiques performing at the bottom 20% of the chain. We will continuously monitor these boutiques to identify opportunistic closures that would minimize any potential associated write-offs. For fiscal 2019, we plan to open 4 boutiques and expect to close at least 20 boutiques. We will be pausing remodels this year as well.
In summary, we have taken numerous steps toward developing a strong foundation in implementing operational disciplines that will enable improved performance across all financial metrics. We expect the merchandising and promotional strategies we are instituting to result in comparable sales stabilization and merchandise margin expansion in the second half of fiscal 2019. We also expect lower SG&A in fiscal 2019 as a result of the cost reductions we have put in place as well as the improved expense disciplines. We have made meaningful progress over the last 3 months and look forward to sharing updates on our progress in future calls.
From the conference call from the CEO & CFO, impressive background IMHO a rock star in the retail game, check what he did with Ralph Lauren Chaps North America, excellent. https://www.alvarezandmarsal.com/our-people/michael-prendergast
And in better words than I could put forth read his take on all the doomsayers about retail from part of an essay series? he wrote in December 2018. I say the same things every 8-10 years though not as well, retail has its cycle unfortunately they never learn from the past, but one can make good $$ finding the survivors. https://www.alvarezandmarsal.com/insights/retail-isnt-dead-navigating-overhyped-retail-armageddon-part-ii