Why Francesca's Holdings Popped and Then Dropped

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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 Francesca's Holdings (Nasdaq: FRAN  ) opened as much as 11% higher before giving most of those gains as the boutique retailer raised its forecast and reported impressive same-store sales growth in its quarterly report.

So what: Earnings per share grew 71% from a year ago to $0.24, beating estimates of $0.22, while revenues grew 44% on an increase in comps of 16.7%. CEO John De Merritt said the quarter "demonstrated the appeal of our business model of a differentiated merchandise strategy in a boutique environment." The jewelry and clothing seller also raised its fiscal 2012 forecast from a range of $0.96 to $0.98 to a range of $1.00 to $1.01.

Now what: The pullback in the stock was probably more a reflection of Francesca's high valuation, now near 30, and concerns about the fiscal cliff than any problems with the actual report. With skyrocketing same-store sales and 76 new stores open in the past year, increasing the store base by about 25%, there seems to be plenty of room for expansion for Francesca's. Analysts are projecting just a 20% jump in EPS next year. That could be an easy bar for the boutique chain to hop over.

Don't miss the next update on this company. Add Francesca's Holdings to your Watchlist to get alerts on the company.

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Related Tickers

10/21/2016 4:00 PM
FRAN $16.01 Down +0.00 +0.00%
Francesca's Holdin… CAPS Rating: ***