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Francesca's Q2 net sales increased 4% to $119.7 million

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Staff Writer |
Francesca's Holdings
Retails   Comparable sales decreased 3%

Francesca's Holdings Corporation reported financial results for the second quarter ended July 29, 2017.

Net sales increased 4% to $119.7 million from $115.3 million in the comparable prior year quarter.

This increase was due to the addition of 40 net new boutiques since the end of the second quarter last year.

Comparable sales decreased 3% compared to the same period last year due to a decrease in boutique conversion rates.

Prior year second quarter comparable sales were flat. The company opened 16 new boutiques and closed three boutiques during the quarter, bringing the total count to 692 at the end of the quarter.

Gross profit, as a percent of net sales, decreased to 46.3% from 46.8% in the prior year quarter. This was primarily due to deleveraging of occupancy costs as merchandise margin compared to last year was essentially flat.

Selling, general and administrative expenses (“SG&A”) increased 18% to $43.5 million from $36.8 million in the prior year quarter. This increase was primarily due to higher boutique and corporate payroll, professional service fees, software, stock-based compensation and marketing expenses.

Additionally, prior year SG&A included a $2.0 million net benefit in connection with the resignation of the company's previous chairman, president and chief executive officer.

Income from operations was $11.9 million, or 10.0% of net sales, compared to $17.1 million, or 14.9% of net sales, in the prior year quarter.

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