Francesca's Q2 net sales increased 9% to $115.3 million
Staff Writer |
Francesca's Holdings Corporation reported financial results for the second quarter ended July 30, 2016.
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Net sales increased 9% to $115.3 million from $106.0 million in the comparable prior year period. This increase was due to the addition of 44 net new boutiques since the prior year period, and a 37% increase in ecommerce sales to $4.8 million driven by increased website traffic and conversion rate.
Francesca's total comparable sales were flat compared to the same period last year as the increase in transactions offset the decrease in average transaction value.
The company opened 19 new boutiques and closed four underperforming boutiques during the quarter bringing company's total boutique count to 652 at the end of the quarter.
Gross profit, as a percentage of net sales, decreased to 46.8% from 47.4% in the prior year quarter. This decrease is attributable to 30 basis points of lower merchandise margin and 30 basis points deleveraging of occupancy costs.
Francesca'sThe decrease in merchandise margin was primarily attributable to a sales mix change to lower margin categories.
Selling, general and administrative expenses (SG&A) increased 5% to $36.8 million from $35.1 million in the prior year quarter. The increase in SG&A is primarily due to increased corporate and boutique payroll, to support the larger boutique base and strategic initiatives, as well as an increase in marketing and depreciation expenses.
The increase in marketing expense was due to implementation of new marketing initiatives, while the higher depreciation was due to continuing investments in technology and infrastructure.
These changes were partially offset by a $2.0 million net benefit associated with the previously announced resignation of company's prior chairman, president and CEO, which consisted of $2.6 million reversal of previously accrued stock-based compensation expense related to the forfeiture of unvested awards and $0.6 million of professional expenses related to the search process.
Income from operations was $17.1 million, or 14.9% of net sales, compared to $15.2 million, or 14.3% of net sales, in the prior year quarter. ■