Record dip for Francesca's stock after weak FY13 forecast

ANALYSIS_ Francesca’s Holdings Corp. (FRAN) shares lost the most since the company's IPO in 2011 after the womenswear retailer lowered its its full-year profit forecast and said customer traffic will remain low. “While we anticipate

challenges in the near-term given the difficult and choppy traffic trends, we will remain confident about the longer term prospects for our business,” Chief Executive Officer Neill Davis said on a conference call.

Francesca’s lowered its estimates for its full-year profit to as much as 1.16 dollars a share from their previous 1.30 dollars, excluding some items, while market expected profits to come at 1.28 dollars a share. In the same vein, Francesca reported earnings for the last ended quarter of 0.3 dollars a share, below the 35 cents anticipated by the analysts polled by Bloomberg.

On the back of the news, Francesca's Holding shares in New York shredded 26 percent to 17.79 dollars at the close in Wall Street, the most since the company’s initial public offering in July 2011. Shares tumbled 18 percent to 19.80 dollars premarket Wednesday as Francesca’s gave a third-quarter outlook well below Wall Street views, reported The Wall Street Journal.

Same store sales, as well as their online sales, fell 1 percent in the second quarter, compared to the comparable period´s 21 percent increase a year earlier. The retailer was hurt by the lack of a dominant apparel fashion trend in the quarter and lower levels of customer traffic, as Davis explained in a conference with analysts.

Buyback program to boost stock's value

After releasing what the market has defined as “disappointing quarterly earnings”, Francesca's Holdings (NASDAQ: FRAN) is attempting to boost the value of its stock through a repurchase initiative, points out the ‘Motley Fool’. The company's board has authorized a buyback program for up to 100 million dollars’ worth of stock with immediate effect.

The buybacks will be effected through various means, including open-market purchases and "such other strategies as would be appropriate under the circumstances," explained the company in a note Wednesday.

Francesca's Holding's CEO stressed that "We have built a very profitable business model which generates a considerable amount of free cash flow even after funding all of the investments required to fuel this growth."

At present, Francesca's Holdings has just more than 44 million shares outstanding.