Just two weeks to go for third-quarter fiscal 2018 results, Francesca's Holdings Corporation (FRAN - Free Report) released its preliminary estimated financial numbers. Soft boutique traffic continued to linger during the third quarter as well. Further, the company has been witnessing dismal top line for quite a while now. A clear reflection of the same is visible in the stock’s performance.
We note that shares of this Zacks Rank #4 (Sell) company have crashed 65% compared with the industry’s decline of 13.5% in the past six months.
Preliminary Estimated Financial Results for Q3
Francesca's Holdings announced its preliminary estimated results, wherein net sales for the third quarter declined by 10% to $95 million from $106 million reported in the year-ago period. Prior to that, net sales dipped 6% and 7% in the second and first quarter, respectively. Notably, the declining comparable sales (comps) are hurting the top line.
Comps in the first and second quarter decreased by 16% and 13%, respectively, due to the decline in both boutique traffic and conversion rate. Again, in the third quarter, the metric slipped 14%, mainly due to traffic declines in the mid-teens.
Further, the company expects non-cash asset impairment regarding long-lived boutique assets to come in at roughly $15 million. Excluding non-cash asset impairment, Francesca's Holdings expects to incur adjusted loss in the range of 17-19 cents per share.
Following the release of preliminary estimated financial results, shares of the company plunged around 12% in after-market trading session on Nov 26. Management hinted that the company is grappling with lower traffic count and has failed to deliver desired results. Francesca's Holdings is scheduled to report third-quarter numbers on Dec 11.
No wonder, the company is focusing on enhancing traffic trends by improving marketing reach and top-line trends. Also, the company is emphasizing on reducing expenses, cash management and e-commerce growth. Management believes the company’s merchandising strategy, investment in omni-channel and reformatting its boutiques will help augment results.
However, we believe that such efforts will take time to yield favorable outcome and win back investors’ confidence in the stock. That said, the current dismal performance remains a concern for the company.
3 Stocks to Watch
Rocky Brands (RCKY - Free Report) delivered an average positive earnings surprise of 53.3% in the trailing four quarters and carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Deckers Outdoor Corporation (DECK - Free Report) delivered an average positive earnings surprise of 69.1% in the trailing four quarters. It has a long-term earnings growth rate of 11.3% and a Zacks Rank #2 (Buy).
Skechers U.S.A. (SKX - Free Report) delivered an average positive earnings surprise of 11.9% in the trailing four quarters. It has a long-term earnings growth rate of 7% and a Zacks Rank of 2.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>