Francesca's Holdings Corporation announced consolidated earnings results for the fourth quarter and full year ended February 3, 2018. For the quarter, net sales decreased 5% to $138.5 million from $146.3 million in the comparable prior year quarter. This decrease was due to a 15% decrease in comparable sales compared to flat in the comparable prior year quarter. The decrease in comparable sales was primarily due to a decline in boutique conversion rate and traffic, as merchandise did not resonate with guests. This decrease was partially offset by the sales from 50 net new boutiques since the prior year quarter and $5 million in sales for the 53rd week of fiscal year 2017. Income from operations was $10.4 million, or 7.5% of net sales, compared to $23.6 million, or 16.1% of net sales, in the prior year quarter. Net income was $3.7 million, or $0.10 diluted earnings per share, and, excluding the re-measurement of net deferred tax assets, adjusted net income was $7.1 million, or $0.20 adjusted diluted earnings per share. This compares to prior year quarter net income of $14.6 million, or $0.39 diluted earnings per share. Income before income tax expense was $10,310,000 against $23,502,000 for the same period a year ago.

For the year, net sales decreased 3% to $471.7 million from $487.2 million in the prior year. This decrease was due an 11% decrease in comparable sales compared to a 2% increase in the prior year. This decrease was partially offset by the sales from 50 net new boutiques since the prior year-end and $5 million in sales for the 53rd week of fiscal year 2017. Net income totaled $15.6 million, or $0.43 diluted earnings per share, compared to $42.0 million, or $1.09 diluted earnings per share, in the prior year. Income from operations was $29,962,000 against $67,608,000 for the same period a year ago. Income before income tax expense was $29,856,000 against $67,608,000 for the same period a year ago. Net cash provided by operating activities was $24,825,000 against $72,171,000 for the same period a year ago. Purchase of property and equipment was $26,778,000 against $21,852,000 for the same period a year ago.

The company provided earnings guidance for the first quarter ending May 5, 2018 and fiscal year ending February 2, 2019. For the first quarter ending May 5, 2018, net sales are expected to be in the range of $100 million to $103 million, assuming a 13% to 15% decrease in comparable sales compared to the prior year decrease of 5%. Loss per share is expected to be in the range of $0.10 to $0.13. For the first quarter, total gross margin is expected to decrease significantly compared to last year as occupancy deleverages substantially and merchandise margins decrease by approximately 200 basis points. This decrease is primarily related to deeper markdowns as the company seeing discipline in markdown cadence to achieve desired sell-throughs.

For the fiscal year ending February 2, 2019, net sales are expected to be in the range of $485 million to $499 million; assuming a low-single digit decrease in comparable sales compared to the prior year decrease of 11%. Diluted earnings per share are expected to be in the range of $0.53 to $0.63 compared to prior year of $0.43. This also compares to prior year adjusted diluted earnings per share of $0.52 which excludes the $3.3 million, or $0.09 per diluted share, charge related to the re-measurement of the company's deferred tax assets. Capital expenditures for fiscal year 2018 are expected to be approximately $30 million. The company expects effective tax rate to around 26% in fiscal 2018. The company expects total gross margin to increase slightly compared to last year, driven by higher merchandise margins, primarily to increases in the back half of the year as company anniversary the deep markdowns taken to deal with last year's merchandise.