What happened
Shares of apparel, jewelry, accessory, and gift retailer Francesca's (FRAN) fell as much as much a 20.7% on Friday after the company updated its guidance for its fourth quarter based on its holiday results. The stock is down about 20% at the time of this writing.
The sell-off in Francesca's stock price on Friday is likely because investors are disappointed in the worsened outlook for the quarter. Francesca's now expects a worse-than-anticipated decline in comparable sales and lower revenue than it was initially forecasting.
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So what
Francesca's management said it expects fourth-quarter net sales between $137 million and $139 million, down from a previous forecast for net sales between $145 million and $150 million. Similarly, Francesca's expects comparable sales to decline 15% to 17% year over year, compared to previous guidance for comparable sales to decrease 9% to 12%.
"Our Holiday performance was disappointing as challenging conversion rates and traffic trends that started in the third quarter persisted into the holiday season," said Francesca's CEO Steve Lawrence.
Now what
While Francesca's wasn't able to meet its targets during the holiday season, management believes it is taking the right steps to reinvigorate its business. After reporting disappointing third-quarter results in December, management said it was refocusing on its core target market and revitalizing its merchandise assortment to offer unique and trendy selections at good prices.
"We are confident we are taking the right actions to regain momentum in our business and believe we will see sequential improvement as we continue to execute on these initiatives," Lawrence said.
