Francesca's Holdings Corporation announced consolidated earnings results for the second quarter and six months ended August 4, 2018. For the quarter, the company reported net sales of USD 113,025,000 compared to USD 119,707,000 a year ago. Income from operations was USD 830,000 compared to USD 11,839,000 a year ago. Income before income taxes was USD 820,000 compared to USD 11,848,000 a year ago. Net income was USD 454,000 or USD 0.01 per diluted share compared to USD 7,263,000 or USD 0.20 per diluted share a year ago.

For the six months, the company reported net sales of USD 213,430,000 compared to USD 11227,396,000 a year ago. Loss from operations was USD 3,690,000 compared to profit of USD 19,145,000 a year ago. Loss before income taxes was USD 3,667,000 compared to profit of USD 19,112,000 a year ago. Net loss was USD 3,431,000 or USD 0.10 per diluted share compared to profit of USD 11,596,000 or USD 0.32 per diluted share a year ago. Net cash provided by operating activities was USD 10,936,000 against USD 8,454,000 a year ago. Purchases of property and equipment were USD 14,436,000 against USD 12,890,000 a year ago.

For the third quarter ending November 3, 2018, net sales are expected to be in the range of USD 105 million to USD 110 million, assuming a comparable sales decrease of 3% to 8% compared to the prior year decrease of 18%. The company plans to open one new boutique and close three existing boutiques during the third quarter. The company expects a diluted loss per share of USD 0.03 to diluted earnings per share of USD 0.02. The tax rate for the third quarter is expected to be 35%.

For the fiscal year ending February 2, 2019, net sales are now expected to be in the range of USD 453 million to USD 463 million; assuming a comparable sales decrease of 8% to 10% compared to the prior year decrease of 11% in comparable sales. Diluted earnings per share are expected to be in the range of USD 0.15 to USD 0.25 compared to prior year diluted earnings per share of USD 0.43. This also compares to prior year adjusted diluted earnings per share of USD 0.52, which excludes the USD 3.3 million, or USD 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 still expected to be approximately USD 30 million, including USD 22 million for the 80 to 85 refreshes and 34 new boutiques. The remainder of CapEx will be spent or has been spent on the company's new warehouse management system, loyalty program and other technology and corporate investments that support short-term improvement and long-term growth. Depreciation for the full year is expected to be approximately USD 25 million. The company is looking for some free cash flow in the year. Gross margin as a percentage of sales is expected to decline due to occupancy deleverage. Merchandise margins are expected to be flattish.