Francesca’s will shut 140 shops, could file for chapter
A pedestrian walks by a Francesca’s store in New York.
Scott Mlyn | CNBC
Francesca’s said Monday that it will permanently close about 140 stores by the end of January, but also warned that it may have to take more significant steps to stabilize its finances — including filing for bankruptcy.
The apparel and accessories retailer is “evaluating various alternatives to improve its liquidity and financial position,” such as cutting its operating expenses, raising capital, refinancing its debt or negotiating ways to reduce lease expenses through concessions and deferrals, according to a filing with the Securities and Exchange Commission.
“If the Company is unable to raise sufficient additional capital to continue to fund operations and pay its obligations, the Company will likely need to seek a restructuring under the protection of applicable bankruptcy laws,” Francesca’s said in the filing.
The retailer said it expects to incur total impairment charges of about $29 million to $33 million because of the store closures.
Francesca’s is among the retailers that have been pushed to the brink by the coronavirus pandemic, as it’s weathered temporary store closures and struggled with a drop in shopping mall traffic, while trying to manage the shift to online sales. A growing number of retailers have filed for bankruptcy protection, including J.C. Penney, Neiman Marcus and Brooks Brothers.
Some of those retailers, such as Penney’s, have managed to find a buyer that can keep stores open. Others, such as Stein Mart had to liquidate their stores and shutter the business entirely.
Francesca’s stock, which has a market value of $7.2 million, has fallen 85% over the past year. The shares dropped more than 35% in trading Monday to about $2.36.