Stifel comments on Francesca's Holdings (Nasdaq: FRAN) following the retailer's Q1 report and outlook issued earlier Wednesday.

Analyst Richard Jaffe noted that Francesca's Q1 EPS of $0.17 was flat with views. The company also issued cautious Q2 commentary, looking for EPS of $0.20 to $0.23, while Stifel is at EPS of $0.24 and the Street consensus is at $0.27.

Jaffe commented, While we believe FRAN’s business model will prove to be effective longer term, the challenge for us is timing and valuation. With decelerating square foot growth, and an operating model that has shown itself vulnerable to the vagaries of fashion, we believe that this is a business that appears to be increasingly challenged, as it grows, to source the right quantity of the right product at the right price.

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