Francesca's Holdings Corporation reported financial results for the first quarter ended May 2, 2015. Net sales increased 11% to $95 million from $85.4 million in the comparable prior year period.
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This increase was driven by 76 new boutiques opened since the comparable prior year quarter. We opened 50 boutiques during the quarter bringing our total boutique count to 589 at the end of the first quarter.
Our comparable sales decreased 2% due to lower boutique transaction count as compared to last year but was partially offset by a 19% increase in DTC sales. The increase in DTC sales was driven by increased traffic and conversion rates.
Gross profit, as a percentage of net sales, decreased to 47.3% from 49.0% in the prior year quarter. This decrease is attributable to 180 basis points of deleveraging of occupancy costs partially offset by 10 basis points improvement in merchandise margin.
Merchandise margin improved due to lesser promotions and markdowns compared to last year but was partially offset by disposal of certain slow-moving inventory.
Selling, general and administrative expenses ("SG&A") increased 19% to $33.0 million from $27.8 million in the prior year quarter. The increase in SG&A expenses is primarily due to higher boutique and corporate payroll expenses to support the larger boutique base.
Income from operations was $11.9 million, or 12.5% of net sales, compared to $14.0 million, or 16.4% of net sales, in the prior year quarter.
Total cash and cash equivalents at the end of the quarter were $46.1 million compared to $25.4 million at the end of the comparable prior year quarter.
We ended the quarter with $31.4 million of inventory on hand compared to $28.8 million at the comparable prior year period. Average ending inventory per boutique decreased by 5% versus the comparable prior year period.
For the second quarter ending August 1, 2015, net sales are expected to be in the range of $104 million to $107.0 million; assuming a mid to low single digit decrease in comparable sales compared to the prior year comparable sales decrease of 7%.
The company plans to open 20 new boutiques during the second quarter. Diluted earnings per share are expected to be in the range of $0.20 to $0.23. ■