Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Francesca’s Holdings Corp (FRAN): This Fashion Boutique May Be Underestimated

Page 1 of 2

Fashion boutique chain Francesca’s Holdings Corp (NASDAQ:FRAN) reported 1Q 2013 results that included unimpressive comparable store sales and weaker margins, but this miss could be an opportunity.

This clothing and accessories retailer employs business strategies that have been very effective for other stores. Like other fashion retailers that share these strengths, Francesca’s Holdings Corp (NASDAQ:FRAN) carries a premium valuation.

Francesca's Holdings Corp (NASDAQ:FRAN)


Francesca’s Holdings Corp (NASDAQ:FRAN) uses a compelling strategy to sell clothing, jewelry, and accessories. The retailer doesn’t stock large quantities of any individual product, and it frequently switches out its inventory. This strategy provides a strong incentive to buy an appealing product immediately, because if the shopper comes back later, the product might not be there. Games on social networking sites frequently use this marketing strategy as well, which suggests that it’s effective. A brick and mortar store needs effective supply chain management to use this strategy, another strength for Francesca’s Holdings Corp (NASDAQ:FRAN).

Lululemon Athletica inc. (NASDAQ:LULU) demonstrates that stocking products in limited quantities can also provide another financial advantage. Jokes about Lululemon Athletica inc. (NASDAQ:LULU)’s see through yoga pants have showed up in lots of headlines over the past few months, but this retailer understands how marketing works.

In 2012, The Wall Street Journal’s Dana Mattioli reported (pay site) that 95% of Lululemon’s products sold without discounts because of this strategy. Francesca’s Holdings Corp (NASDAQ:FRAN) does hold sales, but this strategy could help the retailer limit its inventory without offering drastic discounts.


Francesca’s Holdings Corp (NASDAQ:FRAN) also uses another effective upscale retail strategy, differentiation. The fashion retailer wants its stores to feel unique, so individual stores’ designs vary to some extent. Urban Outfitters, Inc. (NASDAQ:URBN) also uses variable store designs to differentiate its stores. Eric Feigenbaum, at Vmsd., describes Urban Outfitters, Inc. (NASDAQ:URBN) as retail’s chameleon because of this design strategy. Urban Outfitters’ strategies look like they’re working well at the moment, as the company’s retail segment reported 9% higher comps last quarter including direct sales.


Francesca’s high margins indicate effective inventory management and marketing. The company reported revenue of $296 million and operating income of $77.9 million in 2012, which resulted in a 26.3% operating margin for the year. The company did note that its gross margin declined from 53.1% in the first quarter (Q1) of 2012 to 52.4% in Q1 2013 because of sales promotions, though, and its operating margin dropped as well. Francesca’s operating margin shrank from 23.9% in 1Q 2012 to 22.8% in 1Q 2013, but this result still surpasses many of its peers.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!