What happened

Shares of Francesca's Holdings Corp. (OTC:FRAN) fell as much as 16% early Monday, then settled to trade down 6.5% as of 3:00 p.m. EDT after the women's clothing retailer announced worrisome preliminary results and the departure of its chief merchandising officer, Laurie Hummel.

The company didn't elaborate on Hummel's resignation, noting only that it has commenced a search for her replacement. Meanwhile, for its fiscal second quarter ended July 29, 2017, Francesca's confirmed that comparable sales fell 3%, while diluted earnings per share should arrive at roughly $0.20.

By comparison, in June Francesca's told investors to expect comparable sales in the range of negative 3% to positive 1% and earnings per share in the range of $0.13 to $0.18. 

Francesca's clothing collage, colorful women's clothing and accessories


So what

Francesca's CEO Steve Lawrence rightly stated the company is "pleased" with its bottom-line outperformance, crediting better-than-expected merchandise margins and lower-than-expected sales, general, and administrative expenses.

But he was less than optimistic looking forward, adding, "That said, we note that back-to-school has been off to a very challenging start and our comparable sales have further decelerated from July."

Now what

Investors will need to wait until Francesca's formal second-quarter report on Sept. 6, 2017, for more color on the company's results and forward outlook. But given Lawrence's words of caution surrounding the crucial back-to-school season, it seems obvious that Francesca's will set a low bar for both the coming quarter and the rest of the year. So even with shares down more than 50% in 2017 leading up to this release, it was no surprise to see the stock tumble even more today.

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