Specialty retailer Francesca’s Holding Corporation’s (FRAN) stock soared 35.4% on Dec 5, after the company named specialty retail veteran Michael W. Barnes as the new Chairman, President and Chief Executive Officer (CEO), effective immediately.
Investors are encouraged by the new appointment as Barnes, former CEO of Signet Jewelers Limited (SIG), boasts rich experience in the specialty retail sector. During his four-year leadership, Signet’s share price tripled.
Moreover, Barnes led Signet's significant $1.46 billion acquisition of Zale Corp. The merger resulted in a combined entity generating sales of $6.2 billion from approximately 3,600 retail outlets and annual synergies of roughly $100 million within three fiscal years. Under Barnes’ leadership Signet gained the largest market share in the U.S., U.K., and Canada.
Barnes also held several important positions in the fashion accessory sector for more than 25 years like President, Chief Operating Officer and Director in Fossil Group Inc. (FOSL).
We believe that Barnes will help Francesca’s to turn around amid a tough retail environment and improve its top line which has been soft for the past few quarters.
Francesca’s posted disappointing second-quarter results wherein both earnings and sales missed the Zacks Consensus Estimate due to soft comps and weak margins.
Management announced third-quarter preliminary results concurrent with the press release. It was at the lower end of guidance provided by the company during the second-quarter conference call. For third-quarter fiscal 2014 (to be reported on Dec 10), Francesca’s expects sales of approximately $87 million, a comparable sales decrease of 6% and earnings of 17 cents per share.
Francesca’s currently carries a Zacks Rank #5 (Strong Sell). A Better-ranked stock in the apparel industry worth considering is Iconix Brand Group Inc. (ICON) carrying a Zacks Rank #2 (Buy).
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