Francesca's To Close About 140 Boutiques; Hints At Bankruptcy

(RTTNews) - Francesca's Holdings Corp. is planning to close approximately 140 boutiques by January 30, 2021. The struggling women's apparel and accessories retailer said it is mulling various alternatives to improve its liquidity and financial position, including a bankruptcy.

Francesca's shares plunged around 32 percent on Monday's regular trading, but gained 1.2 percent in the extended trading.

In an an 8-K filing with the U.S. Securities and Exchange Commission, the company said the actual number of boutiques it closes may change. Related to the store closures, Francesca's expects to record impairment charges of around $29 million to $33 million through the period ended October 31.

Aiming to improve its liquidity and financial position, the company considers further lease concessions and deferrals, reductions of operating and capital expenditures, and raising additional capital, including seeking a refinancing of the company's debt.

The company also considers restructuring its debt and liabilities through a private restructuring or a restructuring under the protection of bankruptcy.

Francesca's said, "If the Company is unable to raise sufficient additional capital to continue to fund operations and pay its obligations, the Company will likely need to seek a restructuring under the protection of applicable bankruptcy laws."

In its second quarter, Francesca's had slipped to a loss, and its net sales decreased 29 percent, while comparable sales decreased 5 percent primarily due to a decrease in traffic and the temporary closure of a majority of boutiques as a result of the COVID-19 pandemic. The retailer also reduced clearance inventory by 45 percent. At the end of the second quarter, the company operated total 700 boutiques.

The company then had announced its intention to explore strategic alternatives, noting that there is substantial doubt about its ability to continue as going concern.