Francesca's Holdings Corporation (NASDAQ:FRAN) Q2 2019 Earnings Conference Call - Final Transcript

Sep 10, 2019 • 08:30 am ET


Francesca's Holdings Corporation (NASDAQ:FRAN) Q2 2019 Earnings Conference Call - Final Transcript


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Michael Prendergast

lean and efficient model. With the reduction in force in February we have also benefited from being an organization that is leaner, flatter and quicker to make decisions.

Fourth, we have also reduced store operation and labor expenses. As previously mentioned at the store level we are maintaining a one-to-one staffing model that has yielded meaningful savings, where we did seem uptake in expense to budget was in the bonus compensation as a result of sales performance exceeding goals, which we were pleased to see. As we approach the holiday season, as budgeted, we will look to increase store coverage in high volume doors in peak traffic periods. Overall, we continue to expect to yield approximately $7 million in annualized savings in store labor costs.

Fifth, optimizing our real estate portfolio. We've been pleased with the negotiation process so far, and look forward to continuing to work with our landlord partners. We have done a lot of work around calibrating the lease expense structure, with sales levels, and working with landlords on rent concessions. Additionally, with the improvement in our store performance, we believe that the landlord partners have increased incentive to work with us on lease terms. We look forward to updating you on the future progress in our upcoming calls. The area of business that we are working diligently to improve is our e-commerce channel. Our three areas of focus, are merchandising a product, internal processes, and site functionality. As you may recall, we had excess inventory that we needed to move through the first half of this year, a lot of which was done through our website.

With the lion's share of our excess inventory now behind us, we are focused on improving our online merchandise assortment to meet customer demand, and enhancing how the product is presented online. In the past quarter e-com strategy for product offering was not 100% congruent with brick-and-mortar. And within quarter two, we changed and adjusted the strategy to be at least 100% congruent. We are also working on expanding our offering beyond what we offer in our boutiques, knowing that the e-commerce customer has an appetite for online exclusives.

We have conducted extensive analysis in regards to our style, SKU, number of colors offered versus the sales and inventory productivity ratios to determine the correct level of additional offer needed. We will continue to diligently analyze these metrics and look for ways to enhance our customer selections, to what level of demand to determine on a classification and sub-classification basis. In terms of processes, we've dramatically reduced the time it takes to upload new products onto our site. Previously, we operated an antiquated and complicated process for the photography, inventory, database entry and uploading of a style, for example.

We recognize that getting product on the site quickly is a critical component to our success, as we want to maintain a new and relevant fashion offering each time she visits our website and will continue to improve in this area.