Francesca’s lays off undisclosed number of corporate, store employees

Francesca's, 5468 W FM 1960, in the Champion Forest Plaza is shown Friday, Dec. 28, 2018, in Houston. This section of FM 1960 is also named Cypress Creek Parkway. >>>See other chains that have cut back recently ... less Francesca's, 5468 W FM 1960, in the Champion Forest Plaza is shown Friday, Dec. 28, 2018, in Houston. This section of FM 1960 is also named Cypress Creek Parkway. >>>See other chains that have cut back ... more Photo: Melissa Phillip, Houston Chronicle / Staff Photographer Photo: Melissa Phillip, Houston Chronicle / Staff Photographer Image 1 of / 36 Caption Close Francesca’s lays off undisclosed number of corporate, store employees 1 / 36 Back to Gallery

Francesca's on Thursday said it laid off an undisclosed number of corporate office staff and field managers in late February.

The struggling Houston retailer disclosed the layoffs late Thursday afternoon. It also announced plans to delay the release of its fourth quarter and fiscal 2018 earnings report until May 3 as it reviews previously announced "strategic and financial alternatives," which includes a potential sale of the company.

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"... The Company cannot timely complete its year-end closing procedures without unreasonable effort or expense while simultaneously undergoing its previously announced review of strategic and financial alternatives," Francesca's said in a statement.

The women's apparel and accessories chain announced earlier this year that its board of directors is considering several options to maximize shareholder value, including selling the company, securing additional financing or refinancing its debt. The Houston company hired Rothschild & Co., a French investment bank and financial services company, to evaluate its options, but said it has no set timeline for its decision.

RELATED: Francesca's CEO resigns as Houston retailer explores potential sale

In the meantime, Francesca's is burning through its cash. The company said it has approximately $14.2 million of cash on hand as of April 6, down from approximately $20.1 million on Feb. 2, at the end of its fourth quarter. The company however has access to $15 million of revolving credit, expects to receive a federal tax refund of $8.4 million before May and said it has identified approximately $15 million in additional cost savings within its operations -- in addition to the layoffs.

Francesca's Interim Chief Executive Michael Prendergast said the company is implementing a turnaround plan to improve sales and turn a profit.

The company on Thursday said its fourth quarter sales fell an estimated 14 percent from the same period last year, portending yet another subpar earnings report. Net sales fell an estimated 14 percent to $119.3 million, down from $138.5 million during the fourth quarter last year, according to preliminary results released Thursday.

The company attributed the sales decline primarily to lower foot traffic during the holiday season. Store traffic fell by the "low-teens," the company said.

RELATED: Francesca's stock plunges 12 percent after missing earnings targets

To improve sales and turn a profit, Francesca's said it has simplified its promotional strategy, enhanced its store displays and has shifted its merchandise to fast-fashion, which will hit stores in early June.

Francesca's, which has more than 700 stores nationwide, in December announced plans to close up to 40 underperforming stores in 2019. The company on Thursday said that with its network of hundreds of stores, there are "many opportunities to reduce the cost structure and increase boutique productivity."

"We are well underway with the implementation of a comprehensive turnaround plan to drive improved sales and margin performance through enhanced merchandise offerings and buying processes as well as aligning our expense structure to the current sales levels," Prendergast said in a statement. "We believe these actions will return the company to positive sales, cash flow, and operating income performance over the longer term. We look forward to providing more detail on our progress on the fourth quarter conference call."

Francesca's stock fell 0.6 percent on Thursday to 70 cents.

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