Stifel Positive on Francesca's (FRAN) CEO Appointment; Affirms at 'Hold'
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Stifel affirms Francesca's Holdings Corporation (Nasdaq: FRAN) at Hold after the company announced Tuesday the appointment of Steven P. Lawrence as President and Chief Executive Officer.
Analyst Richard Jaffe commented:
- Good Hire for FRAN: After speaking with company management, we believe Mr. Lawrence is a good fit for the organization. In addition to merchandising, he also has experience in marketing, store operations and omnichannel buying. We view this as a positive given the company already has a strong merchant in place and his focus will be on all aspects of the business. Additionally, the strategy put in place by Michael Barnes continues to effectively drive positive results, allowing Mr. Lawrence to take a longer term view on how to grow the company.
- Slow Start to E-commerce Playing Out Favorably: E-commerce, which represents approximately 5% of total sales, remains a significant opportunity for growth. By being a little late in creating its omnichannel strategy, the company avoided some of the mistakes made by others; significant upfront investments in technology that are no longer utilized. This gave FRAN the opportunity to learn from what others were doing before making the large investments. Management indicated that while e-commerce is dilutive to operating margin it is a positive contribution to EBIT dollars. E-commerce is anticipated to be 20% of total sales in the next five years.
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