Executives with Houston-based apparel and accessories retailer Francesca’s say they expect to feel the impact of Hurricane Harvey on sales in the third quarter.
Francesca’s, in its fiscal second quarter earnings release, said its e-commerce fulfillment center, about 40 of its stores and its corporate headquarters were directly affected by the storm. Hurricane Harvey was a Category 4 storm with winds of 130-156 mph when it made landfall Aug. 25, leaving much of Houston underwater.
“We are very fortunate that our home office and distribution center were relatively unscathed by the flooding,” Francesca’s CEO Steve Lawrence told analysts on the retailer’s earnings call Wednesday, according to a transcript from Seeking Alpha. “That being said, as most of our workforce were stranded in their homes for a week or more, we were unable to either receive new goods at our [distribution center] or send merchandise out to our boutiques.”
Francesca’s, No. 658 in the Internet Retailer 2017 Top 1000, posted a warning on its website during the storm to alert shoppers that online orders may be delayed due to Hurricane Harvey.
“A lot of people don’t know we’re located in Houston,” Lawrence said. The notice on its site indicated that shipments likely would probably delayed, and “I think that obviously over the week or so had an impact on our business,” he said.
On Aug. 31, nearly a week after Harvey hit, Francesca’s announced on its Facebook page that its online fulfillment center was back in operation.
A skeleton crew worked in the distribution center over Labor Day weekend and Francesca’s fully reopened its home office Tuesday, Lawrence said. “We’re still playing catch-up on shipping goods to our boutiques, and some elements of our supply chain network are slowly getting back up to speed. This means we will see some level of disruption continuing for another couple of weeks.”
Francesca’s site now informs shoppers that it is back to its regular fulfillment schedule and that all online orders will ship on time. The retailer writes in its 10-Q filing with the U.S. Securities and Exchange Commission that the full impact of Harvey on its business remains to be seen.
Francesca’s does not break out online sales in its quarterly reports, however Lawrence said online accounts for roughly 7% of the retailer’s sales, which would mean that based on total sales of $227.4 million through the first six months of fiscal 2017, Francesca’s generated around $15.9 million in online sales.
“Our No. 1 growth initiative continues to be to increase e-commerce business from roughly 7% penetration today to the mid-teens over the next five years,” Lawrence said. “We have several new initiatives to help drive this, including buy in boutique, ship to home and buy online, ship to boutique capabilities that are currently being piloted with a plan to roll out to all boutiques later in this year.” Francesca’s has 692 bricks-and-mortar stores across the United States.
For the fiscal second quarter ended July 29, Francesca’s reported:
- Net sales of $119.7 million, up 3.8% from $115.3 million during the same time last year.
- A comparable sales decline, including e-commerce, of 3%, which was flat compared with Q2 2016.
- A net profit of $7.3 million, down 31.1% from $10.6 million.
For the first six months of 2017, Francesca’s reported:
- Net sales of $227.4 million, up 2.7% from $221.4 million during the same time last year.
- A comparable sales decline, including e-commerce, of 4%, compared with a 1% gain.
- A net profit of $11.6 million, down 34.5% from $17.7 million.