Shares of apparel, jewelry, accessory, and gift retailer Francesca's (NASDAQ: FRAN) fell as much as much a 20.7% on Friday after the company updated its guidance for its fourth quarter based on its holiday results. The stock is down about 20% at the time of this writing.
The sell-off in Francesca's stock price on Friday is likely because investors are disappointed in the worsened outlook for the quarter. Francesca's now expects a worse-than-anticipated decline in comparable sales and lower revenue than it was initially forecasting.
Francesca's management said it expects fourth-quarter net sales between $137 million and $139 million, down from a previous forecast for net sales between $145 million and $150 million. Similarly, Francesca's expects comparable sales to decline 15% to 17% year over year, compared to previous guidance for comparable sales to decrease 9% to 12%.
"Our Holiday performance was disappointing as challenging conversion rates and traffic trends that started in the third quarter persisted into the holiday season," said Francesca's CEO Steve Lawrence.
While Francesca's wasn't able to meet its targets during the holiday season, management believes it is taking the right steps to reinvigorate its business. After reporting disappointing third-quarter results in December, management said it was refocusing on its core target market and revitalizing its merchandise assortment to offer unique and trendy selections at good prices.
"We are confident we are taking the right actions to regain momentum in our business and believe we will see sequential improvement as we continue to execute on these initiatives," Lawrence said.
10 stocks we like better than Francesca's Holdings
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Francesca's Holdings wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of January 2, 2018
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.