Francesca's Holdings Corporation reported financial results for the fourth quarter and fiscal year ended January 30, 2016.
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Net sales increased 25% to $134.6 million from $107.6 million in the prior year quarter.
This increase was driven by an 11% increase in comparable sales during the fourth quarter as well as the opening of 83 boutiques during fiscal 2015.
The company opened three boutiques and closed six underperforming boutiques during the quarter bringing its total boutique count to 616 as of January 30, 2016.
The increase in comparable sales was driven by increases in comparable transactions and average transaction value. Direct-to-consumer sales increased 38% to $6.1 million during the quarter compared to $4.4 million in the same period last year primarily due to increased conversion rate.
Gross profit, as a percentage of net sales, increased to 49.1% from 45.7% in the prior year quarter. This favorable variance included a 290 basis points higher merchandise margin and 50 basis points leverage in occupancy costs.
The improvement in merchandise margin was primarily driven by reduced promotional activities during the quarter compared to last year.
Selling, general and administrative expenses (SG&A) increased 9% to $42.0 million from $38.5 million in the prior year quarter. Adjusted SG&A increased 22% to $41.3 million from $33.9 million in the prior year quarter.
The increase in adjusted SG&A is primarily due to higher boutique and corporate payroll expenses to support the larger boutique base and sales growth as well as increased performance-based incentive bonus expenses over the prior year quarter.
Income from operations was $24.2 million, or 18.0% of net sales, compared to $10.7 million, or 10.0% of net sales, in the prior year quarter. Adjusted income from operations was $24.8 million, or 18.4% of net sales, compared to $15.4 million, or 14.3% of net sales, in the prior year quarter.
Our effective tax rate for the fourth quarter was 38.9% compared to 43.1% in the comparable prior year quarter. The prior year tax rate was impacted by the true-up of state income taxes for years prior to fiscal 2014. Excluding this adjustment, the effective tax rate for the fourth quarter last year was 38.1%.
Net income for the fourth quarter totaled $14.7 million, or $0.35 diluted earnings per share, compared to $6.0 million, or $0.14 diluted earnings per share, in the comparable prior year period.
Adjusted net income for the fourth quarter totaled $15.0 million, or $0.36 adjusted diluted earnings per share, compared to $8.8 million, or $0.21 adjusted diluted earnings per share, in the comparable prior year period.
Full year results
Net sales increased 16% to $439.4 million in fiscal year 2015 compared to $377.5 million in fiscal year 2014. This year-over-year increase in sales is driven by a 3% increase in comparable sales as well as the new boutiques opened since the prior year end.
Direct-to-consumer sales increased 18% versus the prior year due to increased conversion rate.
During fiscal year 2015, we opened 83 new boutiques and closed six underperforming boutiques.
Net income for fiscal year 2015 totaled $38.2 million, or $0.91 diluted earnings per share, compared to $32.1 million, or $0.76 diluted earnings per share.
Adjusted net income for fiscal year 2015 totaled $38.5 million, or $0.92 adjusted diluted earnings per share, compared to $35.0 million, or $0.83 adjusted diluted earnings per share, in fiscal year 2014. ■