Francesca's Holdings has filed for Chapter 11 bankruptcy protection after months of uncertainty. It proposes to sell the company to an investment group.
The Houston-headquartered retailer is the latest clothing chain to see bankruptcy protection as a result of the international health crisis - joining J.C. Penney Co., Inc., Stein Mart, New York & Co., Inc., Guitar Center, Ascena Retail Group, Sur La Table, among others.
Francesca's markets itself as a one-stop-shop for fashion. The retailer replenishes its merchandise daily and has the capacity to deliver more than 100,000 units per day. About 50% of its 1,500-square-foot boutiques are at malls.
The company temporarily closed in March and started to reopen in April - leading to a 50% decline in revenues in the first three months.
Francesca's said Nov. 16 it was shutting 140 shops by the end of January. The previously announced store closings represented around 20% of the retailer's bricks-and-mortar branches in 48 U.S. states.
Francesca's plans to use the Chapter 11 proceedings to impose a sale process focused on its core retail sites and the company's new brand launches and digital expansion.
The retailer was in trouble before the pandemic. Last year revenues fell 15%. And on Sept. 15 the company said its second quarter sales dropped 30%.
Francesca's said 558 shops remained open but it was looking to renegotiate leases during the process - which may include shutting more boutiques, USA Today reported.
The company said late last week it was securing $25 million debtor-in-possession financings from its existing lender to pay for the sales, subject to court approval. Francesca's board of directors unanimously agreed that selling the business was a "necessary step forward."
According to Francesca's chief executive officer Andrew Clarke, it is confident it will emerge "a stronger company poised to steer growth by exploring new brand avenues, expanding e-commerce channels and providing clients with the latest fashion options," Best Life quoted Clarke saying in a statement.
Francesca said it had lined up a "stalking horse" proposal and had a letter of intent from TerraMar Capital LLC, an investment company that provides debt and equity capital to middle-market businesses.
