Company Overview
| Company Name |
FRANCESCA'S HOLDINGS CORP |
| Company Address |
8760 CLAY ROAD
Houston, TX 77080 |
| Company Phone |
713-864-1358 |
| Company Website |
www.francescascollections.com |
| CEO |
John De Meritt |
| Employees (as of 4/30/2011) |
1641 |
| State of Inc |
-- |
| Fiscal Year End |
-- |
| Status |
Priced (7/22/2011) |
| Proposed Symbol |
FRAN |
| Exchange |
Nasdaq National Market |
| Share Price |
$17.00 |
| Shares Offered |
10,000,000 |
| Offer Amount |
$170,000,000.00 |
| Total Expenses |
$2,780,300.00 |
| Shares Over Alloted |
0 |
| Shareholder Shares Offered |
7,058,824 |
| Shares Outstanding |
43,525,820 |
| Lockup Period (days) |
180 |
| Lockup Expiration |
1/18/2012 |
| Quiet Period Expiration |
8/31/2011 |
| CIK |
0001399935 |
We estimate that we will receive net proceeds from this offering of
approximately $43.7 million, based upon our initial public offering price of
$17.00 per share and after deducting the underwriting discounts and commissions
and estimated offering expenses payable by us. We will not receive any proceeds
from the sale of shares of our common stock by the selling stockholders, which
includes certain of our officers and directors, including any shares sold by
the selling stockholders in connection with the exercise of the underwriters’
option to purchase additional shares.
The terms of our existing senior secured credit facility require us to apply
the net proceeds of this offering to prepay the existing loans in an amount
equal to such net proceeds. We intend to use the full net proceeds of this
offering (based upon our initial public offering price of $17.00 per share)
of $43.7 million, together with $49.0 million of borrowings under a new
revolving credit facility, to repay our existing senior secured credit
facility in full. If we do not enter into a new revolving credit facility,
then we will use the full net proceeds of this offering (based upon our
initial public offering price of $17.00 per share) of $43.7 million to prepay
the existing loans as required by the terms of our existing senior secured
credit facility, in which case $49.0 million of the existing loans would
remain outstanding after this offering.
Affiliates of Goldman, Sachs & Co., J.P. Morgan Securities LLC, Jefferies &
Company, Inc., RBC Capital Markets, LLC, Stifel, Nicolaus & Company,
Incorporated and KeyBanc Capital Markets Inc., underwriters for this offering,
are lenders under our existing senior secured credit facility and will receive
all of the proceeds used to repay amounts outstanding under our existing senior
secured credit facility. In connection with such repayment, affiliates of
Goldman, Sachs & Co., J.P. Morgan Securities LLC and Jefferies & Company, Inc.
will each receive $9.47 million of such net proceeds, an affiliate of RBC
Capital Markets, LLC will receive $6.56 million of such net proceeds and
affiliates of Stifel, Nicolaus & Company, Incorporated and KeyBanc Capital
Markets Inc. will each receive $4.37 million of such net proceeds. On an
aggregate basis, affiliates of the underwriters will receive $43.7 million of
the net proceeds from this offering as part of such repayment.
Our existing senior secured credit facility consists of a $95.0 million term
loan facility and a $5.0 million revolving credit facility, each with a
scheduled maturity date of November 17, 2013. As of April 30, 2011, we had
$92.6 million outstanding under our term loan facility and $5.0 million
available under our revolving credit facility. Immediately prior to the
completion of this offering, we anticipate that there will be $91.4 million
of term loans and no amounts of revolving loans outstanding under our existing
senior secured credit facility. We used all of the term loan borrowings, along
with cash on hand, to pay a dividend of $100.0 million on our common stock
during November 2010. The borrowings under our existing senior secured credit
facility bear interest at a rate equal to an applicable margin plus, at our
option, either (a) in the case of base rate borrowings, a rate equal to the
highest of (1) the higher of (i) the prime rate of Royal Bank of Canada and
(ii) the federal funds rate plus 1/2 of 1%, (2) the LIBOR for an interest
period of one month plus 1.00% and (3) 2.75% or (b) in the case of LIBOR
borrowings, a rate equal to the higher of (1) 1.75% and (2) the LIBOR for the
interest period relevant to such borrowing. The current applicable margin for
borrowings under both the revolving credit facility and the term loan facility
is 5.00% with respect to base rate borrowings and 6.00% with respect to LIBOR
borrowings. The applicable margin for borrowings under both the revolving
credit facility and the term loan facility for base rate borrowings increases
to 6.50% and 9.00% on June 1, 2012 and June 1, 2013, respectively. The
applicable margin for borrowings under both the revolving credit facility and
the term loan facility for LIBOR borrowings increases to 7.50% and 10.00% on
June 1, 2012 and June 1, 2013, respectively. As of January 29, 2011, the loans
under our existing senior secured credit facility were LIBOR-based and had an
interest rate of 7.75%.
The women’s apparel, jewelry, accessories and gifts market is large,
fragmented and highly competitive. The largest competitors include national
and regional department stores, specialty retailers, mass merchants and
internet-based retailers. Due to the breadth of our merchandise, it is
difficult to identify companies that compete with us in every product
category. However, select national, women’s specialty stores chains that we
believe are competitors and that we encounter in multiple markets include
White House | Black Market, Ann Taylor, Charlotte Russe, Brighton Collectibles
and Anthropologie. Our boutiques also compete with individual, often
owner-operated specialty shops in each of the markets that we operate as well
as broadly merchandised department stores and certain specialty stores in
categories such as accessories and footwear. We may face new competitors and
increased competition from existing competitors as we expand into new markets
and increase our presence in existing markets.
The principal basis upon which we compete is by offering a differentiated
shopping experience through high-quality, trend-right merchandise at
attractive prices in a warm and inviting boutique environment with excellent
customer service. In addition, our manageable boutique size and flexible but
disciplined real estate strategy provide us with a competitive advantage that
is not easily replicated by our major competitors. Our success also depends in
substantial part on our ability to respond quickly to fashion trends so that
we can meet the changing demands of our customers.
Company Description
francesca's collections® is one of the fastest growing specialty retailers in
the United States. Our retail locations are designed and merchandised to feel
like independently owned, upscale boutiques and provide our customers with an
inviting, intimate and differentiated shopping experience. We
believe we offer
compelling value with a diverse and uniquely balanced mix of high-quality,
trend-right apparel, jewelry, accessories and gifts at attractive prices. We
tailor our assortment to appeal to our core 18-35 year-old, fashion conscious,
female customer, although we find that women of all ages are attracted to our
eclectic and sophisticated merchandise selection and boutique setting. We
carry a broad selection but limited quantities of individual styles and
introduce new merchandise to our boutiques five days a week to create a sense
of scarcity and newness, which helps drive customer shopping frequency and
loyalty.
Our boutiques have been successful across a wide variety of geographic markets
and shopping venues. We believe we have an opportunity to continue to grow our
boutique base from 249 locations in 38 states as of April 30, 2011 to
approximately 900 boutiques in the United States over the next seven to ten
years by capitalizing on the flexibility and compelling economics of our
boutiques. Our merchandise is also available through our e-commerce website,
www.francescascollections.com.
We believe that through the strength of our business model and our disciplined
operating philosophy, we have achieved strong financial performance and growth
that is among the best in the specialty retail sector:
. For the thirteen weeks ended April 30, 2011, our net sales were $41.3
million, an increase of 62.4%, from $25.4 million for the thirteen weeks
ended May 1, 2010. Income from operations increased from $2.6 million for
the thirteen weeks ended May 1, 2010 to $8.4 million for the thirteen
weeks ended April 30, 2011. Our comparable boutique sales increased by
14.7% for the thirteen weeks ended April 30, 2011. For the same period in
the prior year, comparable boutique sales increased by 14.5%.
. Between fiscal year 2008 and 2010, our net sales increased from $52.3
million to $135.2 million, representing a compound annual growth rate of
60.8%.
. Our comparable boutique sales increased by 15.2% in fiscal year 2010 after
a 9.8% increase in fiscal year 2009.
. Between the end of fiscal year 2008 and 2010 our boutique count increased
from 111 to 207, representing a compound annual growth rate of 36.6%.
. Between fiscal year 2008 and 2010 our income from operations increased
from $7.0 million to $29.6 million, representing a compound annual growth
rate of 106.2%.
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We opened our first boutique in Houston, Texas in 1999. John De Meritt, our
President and Chief Executive Officer, and Kyong Gill, our Executive Vice
Chairperson, are two of the original four Founders of francesca’s
collections®. In February 2010, CCMP acquired a controlling interest in
the company with the goal of supporting Mr. De Meritt and the management team
in accelerating our growth.
Holdings was incorporated in Delaware in 2007. We are a holding company and
all of our business operations are conducted through Francesca’s
Collections, our wholly owned operating subsidiary. Francesca’s Collections
was formed in 2006 and is the successor-in-interest of PFD II, Inc., a
corporation incorporated in 1999 under the laws of the State of Texas. In
2002, we incorporated Francesca’s Collections of CA, Inc., under the laws of
California to own and operate our boutiques in California. In 2008,
Francesca’s Collections of CA, Inc., was merged into Francesca’s Collections
and as a result of such merger, Francesca’s Collections of CA, Inc. ceased
to exist.
Our principal executive office is located at 3480 W. 12th Street, Houston,
Texas 77008, our telephone number is (713) 864-1358 and our fax number is
(713) 426-2751. We maintain a website at www.francescascollections.com.