• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Consumer Discretionary

Francescas Lags With Lack of Leadership

The retailer feels the mall slump as it missed top-line estimates, says analysts. 
By ANDERS KEITZ Jun 09, 2016 | 04:30 PM EDT
Stocks quotes in this article: FRAN

Shareholders of Francescas Holdings Group (FRAN) seem to be excited about the retailer's latest quarterly report but analysts are not as optimistic, viewing the retailer as the latest victim of the mall store slump.

Francescas missed top-line estimates but beat bottom-line predictions by a penny, coming in at $0.18, for the 2016 fiscal first quarter. Shares were up by more than 2% today, nearing $11 in response to the results.

But shareholders might be overlooking the fact that the company preannounced first-quarter earnings two days after CEO Mark Barnes decided to part ways. The early earnings announcement of $0.17 per share was below consensus and on the low end of the guidance range between $0.17 and $0.20; still, that might have eased the sting from the actual quarterly results, as gross profit (as a percentage of net sales) dropped by one percent to 46.3%.

In mid-May the company announced that Barnes was leaving for personal reasons. Richard Kunes stepped in as interim chairman and CEO until a successor is found. Immediately following the news, Jefferies analysts downgraded Francescas' rating to Hold saying Barnes' departure was disappointing, considering he was there for less than two years.

"We continue to believe that fundamentals may not be as powerful under a lack of stable leadership," said the Jefferies analysts in a May 17 note. They also said due to the significant uncertainty around the timing of the turn, they no longer believe the shares warrant a premium multiple. The analysts slashed their price target in half to $11, in addition to lowering EPS estimates for the next two years.

Analysts at Wedbush maintained their price target of $12 and a rating of Neutral prior to Thursday's report. But they cited several challenges that Francescas faces in the future, including tough macro traffic trends and promotions across retail and uncertainty around the CEO departure.

"Near term, our QTD checks indicate the elevated promotions in store are driving traffic, but margins remain at risk," said the Wedbush analysts in a research note Monday. Additionally, they see modest risk to consensus second-quarter and fiscal-year estimates based on other quarterly commentary across the industry and elevated promotions and inventory in store.

The consensus rating remains Hold, according to Bloomberg, with a target price of $15. But Francescas' shareholders have seen the stock slump by nearly 39% so far for the year, with the biggest drop on May 17.

Wedbush analysts believe investors will be focused on the second-quarter guidance, the progress of the CEO hire and updates on strategic initiatives to see if they should stay with the stock. The company has plans to open 15 to 20 new boutiques in the fiscal second quarter, and expects a decrease in comparable net sales with a diluted earnings range between $0.16 and $0.19 per share, which includes a $0.04 per share impact from Barnes' departure. And with no news of a permanent CEO, Francescas' still lacks the leadership it needs.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Employees of TheStreet are restricted from trading individual securities. 

TAGS: Investing | U.S. Equity | Consumer Discretionary

More from Consumer Discretionary

Apple's Price Charts Are Getting Badly Bruised

Bruce Kamich
May 12, 2022 1:10 PM EDT

Here's what the odds favor.

RH and Its Charts Don't Have That Homey Feeling Right Now

Bruce Kamich
May 12, 2022 8:32 AM EDT

The technical signals of the home furnishings provider indicate more downside to come in its stock.

Crocs Is Still Slipping to the Downside on Its Charts

Bruce Kamich
May 11, 2022 7:44 AM EDT

The footwear maker isn't seeing a lot of technical support at this point.

Screening for Deep-Value Stocks Turns Up a Pair of Possibilities

Jonathan Heller
May 9, 2022 10:00 AM EDT

A producer of small appliances and a maker of fishing, camping and kayaking gear pop up as possible value plays.

Bearish Bets: 3 Slumping Stocks You Should Consider Shorting This Week

Bob Lang
May 8, 2022 10:30 AM EDT

These recently downgraded names are displaying both quantitative and technical deterioration.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 10:10 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    "Market Timing for Dummies"
  • 01:44 PM EDT STEPHEN GUILFOYLE

    Stocks Under $10 Portfolio

    We're making a series of trades here.
  • 03:07 PM EDT PAUL PRICE

    Why Is Walmart Down Big Today?

    Besides its poor earnings report Walmart was way...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login