UPDATE: Janney Cuts Francesca's (FRAN) to Neutral, Checks Suggest Margins Pressured
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Price: $2.22 --0%
Rating Summary:
9 Buy, 13 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 10 | Down: 6 | New: 33
Rating Summary:
9 Buy, 13 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 10 | Down: 6 | New: 33
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(Updated - November 26, 2013 8:11 AM EST)
Janney Montgomery Scott downgraded Francesca's Holdings (NASDAQ: FRAN) from Buy to Neutral with a price target of $22.00 (from $24.00). Analyst Adrienne Tennant is cautious given the poor environment and sees potential margin pressures.
"We are downgrading shares of FRAN to Neutral from Buy based on the following: 1) challenging mall traffic and promotional environment that we believe will continue to pressure margins over the next 12 months, 2) potential for sustained negative comps in the near-to-medium-term, and 3) apparel and accessory trends that are not as strong as prior year," said Tennant.
Janney checks suggest that Francesca' could be succumbing to the promotional pressure in the Young Adult/Young Women's sector and may need to run store-wide promotions in 4Q13. Checks also suggest that both apparel and accessory inventory is beginning to build.
"We expect the company to report 3Q13 EPS of $0.19 (but potentially at the low-end of comp range), roughly in line with the consensus of $0.20 and management guidance in the range of $0.19 to $0.21. We believe there is potential for the company to guide 4Q13 below the current consensus of $0.34; we are currently at $0.29. We do acknowledge that last year, in 4Q12, FRAN was increasingly promotional as well. We believe comps could continue to be negative, and there could be continued merchandise margin pressure due to the highly competitive nature of the mall, as well as building inventory entering the quarter based on our channel checks. In the near-term, we are cautious based on tough growth compares and the challenging mall environment, and we expect comps to remain negative for the foreseeable future as the sector remains under pressure," added the analyst.
For an analyst ratings summary and ratings history on Francesca's Holdings click here. For more ratings news on Francesca's Holdings click here.
Shares of Francesca's Holdings closed at $20.04 yesterday.
Janney Montgomery Scott downgraded Francesca's Holdings (NASDAQ: FRAN) from Buy to Neutral with a price target of $22.00 (from $24.00). Analyst Adrienne Tennant is cautious given the poor environment and sees potential margin pressures.
"We are downgrading shares of FRAN to Neutral from Buy based on the following: 1) challenging mall traffic and promotional environment that we believe will continue to pressure margins over the next 12 months, 2) potential for sustained negative comps in the near-to-medium-term, and 3) apparel and accessory trends that are not as strong as prior year," said Tennant.
Janney checks suggest that Francesca' could be succumbing to the promotional pressure in the Young Adult/Young Women's sector and may need to run store-wide promotions in 4Q13. Checks also suggest that both apparel and accessory inventory is beginning to build.
"We expect the company to report 3Q13 EPS of $0.19 (but potentially at the low-end of comp range), roughly in line with the consensus of $0.20 and management guidance in the range of $0.19 to $0.21. We believe there is potential for the company to guide 4Q13 below the current consensus of $0.34; we are currently at $0.29. We do acknowledge that last year, in 4Q12, FRAN was increasingly promotional as well. We believe comps could continue to be negative, and there could be continued merchandise margin pressure due to the highly competitive nature of the mall, as well as building inventory entering the quarter based on our channel checks. In the near-term, we are cautious based on tough growth compares and the challenging mall environment, and we expect comps to remain negative for the foreseeable future as the sector remains under pressure," added the analyst.
For an analyst ratings summary and ratings history on Francesca's Holdings click here. For more ratings news on Francesca's Holdings click here.
Shares of Francesca's Holdings closed at $20.04 yesterday.
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