Francesca's Holdings Corporation Reports Fiscal 2012 Second Quarter Results, Increased Guidance For The Full Year 2012 And Senior Leadership Transition Plan

Forward-Looking Statements

Certain statements in this release are "forward-looking statements" made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the Company's current expectations or beliefs concerning future events and are subject to various risks and uncertainties that may cause actual results to differ materially from those that we expected. For a discussion of these and other risks and uncertainties that could cause actual results to differ materially from those contained in our forward-looking statements, please refer to "Risk Factors" in our Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 21, 2012. We undertake no obligation to publicly update or revise any forward-looking statement. Financial schedules are attached to this release.

About Francesca's Holdings Corporation

Francesca's Collections is a growing specialty retailer with retail locations designed and merchandised to feel like independently owned, upscale boutiques providing customers a fun and differentiated shopping experience. The merchandise assortment is a diverse and balanced mix of apparel, jewelry, accessories and gifts. Francesca's Collections appeals to the 18-35 year-old, fashion conscious, female customers, although the Company finds that women of all ages are attracted to the eclectic and sophisticated merchandise selection and boutique setting. Francesca's Collections' boutiques carry a broad selection but limited quantities of individual styles and new merchandise is introduced five days a week. For additional information on Francesca's, please visit www.francescascollections.com .

 

Francesca's Holdings Corporation
Unaudited Consolidated Statements of Operations
(In thousands, except per share data and percentages)
	Thirteen Weeks Ended
	July 28, 2012		July 30, 2011		Variance
	In USD	As a % of Net Sales	In USD	As a % of Net Sales	In USD	%	As a % of Net Sales
Net sales	$ 76,365	100.00%	$ 51,221	100.00%	$ 25,144	49.1%	0.00%
Cost of goods sold and occupancy costs	34,549	45.24%	24,220	47.29%	10,329	42.6%	(2.05%)
Gross profit	41,816	54.76%	27,001	52.71%	14,815	54.9%	2.05%
Selling, general and administrative expenses	20,931	27.41%	14,394	28.10%	6,537	45.4%	(0.69%)
Income from operations	20,885	27.35%	12,607	24.61%	8,278	65.7%	2.74%
Interest expense	(177)	(0.23%)	(2,048)	(4.00%)	1,871	(91.4%)	3.77%
Loss on early extinguishment of debt	—	—	(1,591)	(3.11%)	1,591	(100.0%)	3.11%
Other income	115	0.15%	15	0.03%	100	666.7%	0.12%
Income before income tax expense	20,823	27.27%	8,983	17.54%	11,840	131.8%	9.73%
Income tax expense	8,171	10.70%	3,498	6.83%	4,673	133.6%	3.87%
Net earnings	$ 12,652	16.57%	$ 5,485	10.71%	$ 7,167	130.7%	5.86%
Diluted earnings (loss) per common share	$ 0.28		$ 0.13
Weighted average diluted shares outstanding:	44,739		41,513
Change in Comparable Boutique Sales	+ 20.7%		+ 5.4%

	Twenty Six Weeks Ended
	July 28, 2012		July 30, 2011			Variance
	In USD	As a % of Net Sales	In USD		As a % of Net Sales	In USD	%	As a % of Net Sales
Net sales	$ 137,687	100.00%	$ 92,486		100.00%	$ 45,201	48.9%	0.00
Cost of goods sold and occupancy costs	63,328	45.99%	43,861		47.42%	19,467	44.4%	(1.43%)
Gross profit	74,359	54.01%	48,625		52.58%	25,734	52.9%	1.43%
Selling, general and administrative expenses	38,816	28.19%	27,599		29.84%	11,217	40.6%	(1.65%)
Income from operations	35,543	25.81%	21,026		22.73%	14,517	69.0%	3.08%
Interest expense	(432)	(0.31%)	(4,056)		(4.39%)	3,624	(89.3%)	4.08%
Loss on early extinguishment of debt	—	—	(1,591)		(1.72%)	1,591	(100.0%)	1.72%
Other income	152	0.11%	49		0.05%	103	210.2%	0.06%
Income before income tax expense	35,263	25.61%	15,428		16.68%	19,835	128.6%	8.93%
Income tax expense	13,869	10.07%	6,025		6.51%	7,844	130.2%	3.56%
Net earnings	$ 21,394	15.54%	$ 9,403		10.17%	$ 11,991	127.5%	5.37%
Diluted earnings (loss) per common share	$0.48		$0.23
Weighted average diluted shares outstanding:	44,721		41,296
Change in Comparable Boutique Sales	+ 18.3%		+ 9.5%

Francesca's Holdings Corporation
Unaudited Consolidated Balance Sheets
(In thousands)
	July 28, 2012	January 28, 2012	July 30, 2011
ASSETS
Current assets:
Cash and cash equivalents	$ 7,312	$ 14,046	$ 13,412
Accounts receivable	6,925	2,156	5,564
Inventories	19,720	14,688	13,809
Deferred income taxes	2,556	2,352	1,722
Prepaid expenses and other current assets	4,195	2,799	2,300
Total current assets	40,708	36,041	36,807
Property and equipment, net	43,687	33,199	30,483
Deferred income taxes	2,200	952	—
Other assets, net	2,156	2,120	2,431
TOTAL ASSETS	$ 88,751	$ 72,312	$ 69,721
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$ 11,621	$ 8,627	$ 8,331
Accrued liabilities	7,623	9,893	5,639
Total current liabilities	19,244	18,520	13,970
Deferred and accrued rents	21,926	14,890	14,602
Deferred income taxes	—	—	289
Long-term debt	5,000	22,000	41,000
Total liabilities	46,170	55,410	69,861
Commitments and contingencies
Stockholders' equity (deficit):
Common stock -- $.01 par value, 80.0 million shares authorized; 43.8 million shares issued and outstanding at July 28, 2012; 43.5 million shares issued and outstanding at January 28, 2012; 43.5 million shares issued and outstanding at July 30, 2011.	438	435	435
Additional paid-in capital	81,353	77,071	73,127
Accumulated deficit	(39,210)	(60,604)	(73,702)
Total stockholders' equity (deficit)	42,581	16,902	(140)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$ 88,751	$ 72,312	$ 69,721

Francesca's Holdings Corporation
Unaudited Consolidated Statements of Cash Flows
(In thousands)
	Twenty Six Weeks Ended
	July 28, 2012	July 30, 2011
Cash Flows From Operating Activities:
Net income	$ 21,394	$ 9,403
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	3,422	2,154
Stock-based compensation expense	1,648	987
Excess tax benefit from stock-based compensation	(1,907)	(364)
Loss on sale of assets	20	7
Amortization of debt issuance costs	147	390
Loss on early extinguishment of debt	—	1,591
Deferred income taxes	(1,452)	2,592
Changes in assets and liabilities:
Accounts receivable	(4,769)	(1,146)
Inventories	(5,032)	(1,850)
Prepaid expenses and other assets	(1,578)	25
Accounts payable	2,994	2,185
Accrued liabilities	(363)	(771)
Deferred and accrued rents	7,036	6,379
Net cash provided by operating activities	21,560	21,582
Cash Flows Used by Investing Activities:
Purchase of property and equipment	(13,931)	(11,374)
Other	—	30
Net cash used by investing activities	(13,931)	(11,344)
Cash Flows Used by Financing Activities:
Repayments of borrowings under the prior senior secured credit facility	—	(93,813)
Proceeds from issuance of stock in initial public offering, net of costs	—	44,118
Proceeds from borrowing under the new revolving credit facility	—	41,000
Payment of debt issue costs	—	(1,468)
Repayments of borrowings under the new revolving credit facility	(17,000)	—
Proceeds from the exercise of stock options	730	457
Excess tax benefit from stock-based compensation	1,907	364
Net cash used by financing activities	(14,363)	(9,342)
Net increase (decrease) in cash and cash equivalents	(6,734)	896
Cash and cash equivalents, beginning of year	14,046	12,516
Cash and cash equivalents, end of period	$ 7,312	$ 13,412
Supplemental Disclosures of Cash Flow Information:
Cash paid for income taxes	$ 18,328	$ 2,688
Interest paid	$ 315	$ 4,979

CONTACT: ICR, Inc.
         Jean Fontana: 646-277-1214
         [e-mail]

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