IN THE NEWS
WWD: A PARED DOWN FRANCESCA’S RESETS FOR THE FUTURE
By David Moin, as published in WWD February 16, 2021
The specialty chain is making merchandise changes, targeting a wider customer base, and in talks with landlords on the fate of many stores.
There’s a rapidly evolving agenda at Francesca’s, now fresh out of bankruptcy with new owners.
To widen the customer base, a tween collection, called franki by francesca’s , rolled out to 100 Francesca’s stores the first week of February after debuting on francescas.com last December.
Loungewear was introduced last summer, the range in plus sizes was extended, and there’s been some reduction in the SKU count, primarily through reduced dress offerings, as the company skews the assortment more toward casual styles to cater to America’s changing lifestyles.
Chris Kaighn, a former executive with Justice, L Brands and Disney, earlier this month was named senior vice president of stores, strategic partnerships and real estate, suggesting potential arrangements placing the Francesca’s brand on the selling floors and websites of larger retail chains — think Lands’ End selling inside Kohl’s.
Currently, Francesca’s management is evaluating its fleet of 454 stores and is in discussions with landlords to determine what the ultimate store count will be.
“We are in active discussions with the landlord community to agree how many of those stores can continue to remain open. Right now our new owners are committed to a minimum of 275 locations,” Andrew Clarke, chief executive officer of Francesca’s, said in an exclusive interview with WWD.
Clarke characterized the real estate situation as “fluid,” adding, “We are encouraged by how proactively and constructively our landlords have been throughout the year.” He said within Francesca’s brick-and-mortar fleet there’s an “even mix” of sites in enclosed malls, outlet centers, open-air centers and downtown areas. The stores average 1,400 square feet.
Francesca’s store fleet has already been significantly pared down, from 711 locations at the end of 2019 when the specialty retailer generated $407.5 million in volume, to the current 400 plus. But Clarke was quick to say, “The new owners are committed to stores. We are excited the new ownership supports the future growth of Francesca’s as an omnichannel business. Boutiques and stores matter — clearly. Having just brought in a new leader for stores, strategic partnerships and real estate is very much an indication that we see stores being very important as we move forward.”
On Dec. 3, Francesca’s filed for Chapter 11 bankruptcy protection, a victim of the pandemic like many other retailers. There were steep declines in sales as stores temporarily closed and disruptions in the supply chain, bringing the business perilously close to disappearing. The company needed to be sold, get new backing, and needed to restructure its real estate and lease obligations.
On Feb. 1, Francesca’s was sold to Francesca’s Acquisition LLC which is an affiliate of TerraMar Capital LLC; Tiger Capital Group LLC, and SB360 Capital Partners LLC, enabling the company to emerge from bankruptcy. The new Francesca’s got a $25 million asset-based revolving credit facility provided by affiliates of Tiger and SB360, Tiger Finance, LLC and Second Avenue Capital Partners, LLC.
“Through 2020 and during the Chapter 11, we have continued to receive tremendous support from our landlords,” said Clarke. “We are acutely aware the outcome of our process could have been quite different…This has been a difficult time for retailers, landlords, suppliers and our associates. 2020 was complicated. We are grateful for everyone’s support.”
The sale of the company, he emphasized, “is a vote of confidence in our brand and a vote of confidence in brick and mortar retailing.”
“We have a small footprint,” Clarke observed. “Our customer sees us as a local brand, not necessarily as a national chain. We are exploring opportunities to show up in new strategic places through collaboration and partnership…This is a beginning of a new part of our story, the first of one of our stories to tell.
“Prior to the pandemic our customer was a dress-up and go-out type of girl. But for the last 11 or 12 months, she has been curled up and staying at home. We have had to adapt very quickly to reflect that new reality and mind-set. I’m really excited the way our team pivoted our assortment and brand.”
Franki by francesca’s , Clarke said, is “the biggest launch we’ve ever had. We were not public about it. We launched it online at the beginning of December,” without any marketing or announcement. “To date, it has been our largest brand initiative as far as impressions and brand engagement. It was an initiative brought to market in 103 days,” after customer insights and data suggested Francesca’s had an under-served younger customer who shopped with her older sister and aspired to wear what her sister wore. “At the same time we saw some market disruption in the segment, and an opportunity to increase share of wallet.” One opportunity opened up with the liquidation of the Justice tween apparel chain by the parent company Ascena, which sold off the Justice IP.
Clarke joined the Houston-based Francesca’s in February 2020. Just before, he served as president of the Loft women’s specialty chain, which the Ascena Retail Group sold to Sycamore Partners. Prior to that, Clarke was executive vice president and chief merchandising officer at Justice and earlier he worked at Kmart.
Clarke characterized franki by francesca’s as geared for girls ages 12 to 16, with on-trend silhouettes, graphics and prints. About 80 percent of the assortment is styles seen in the core Francesca assortment, which targets 18- to 35-years-olds. The remaining 20 percent of the franki by francesca’s assortment is unique to that label, with its own styles and graphics “and a little bit of modesty” for that younger customer, Clarke said. In the 100 Francesca’s boutiques, franki is displayed on three fixtures.
He said Francesca’s customers were queried on what style advice they would give to “your 12-year-old self, and she told us I would embrace my own identity. I would be fearless showing the world who I am. I would advise myself to express my confidence in a number of different ways. We took that as the spirit of franki.
“We have tested a lot of different ideas. Some have failed, but franki is one example of an initiative that we have scaled,” said the CEO. Loungewear has also been scaled up in stores and online, since launching last July and selling out in three weeks.
With stores temporarily closed last year due to the pandemic, ecommerce sales accelerated, growing 85 percent from the beginning of the store closing period through April 30, and 27 percent in the second quarter, prompting Francesca’s to launch an iOS app last November, which was replaced by an Android app two weeks later for the holiday 2020 season.
“Though many things have been out of our control, as they have been in the last 12 months, we are optimistic we will find a way through it,” said Clarke.
He cited much in Francesca’s assortment showing good selling trends including styles with ruffles, frills, floral prints, leopard prints, puff sleeves, very feminine details in tops and dresses and wide-legged pants, a good deal of which are inspired by the Netflix shows such as “Bridgerton” and “Emily in Paris,” he said.
“Francesca’s is a treasure hunt experience. It’s a boutique atmosphere for head-to-toe dressing,” selling moderate-priced apparel, jewelry, accessories and gifts, Clarke said. It’s a mix of private label merchandise and merchandise bought in the markets.
“As we look further into 2021, we will continue to launch new initiatives, continue to be reactive, and continue on the journey that we have already started.”