Another one bites the dust. Francesca’s is the latest retailer to announce store closures due to the COVID-19 pandemic.
As we head towards the end of 2020 — which has been a disastrous year for many businesses, to say the least — more and more retailers are having to find ways to keep their business afloat.
Francesca’s revealed their plan to close up to 140 stores on Monday, November 16, and even mentioned they might have to file for bankruptcy in the near future.
Read on to learn more about their financial situation and what the closures mean for the company as a whole.
Francesca’s is wasting absolutely no time with their plans, as they are looking to close 140 locations by January 2021.
The company announced its plan in a filing with the Securities and Exchange Commission this week.
“Francesca’s Holdings Corporation (the “Company”) has adopted a plan to close approximately 140 boutiques by January 30, 2021. The actual number of boutiques the Company closes may change,” the company said in the filing.
Francesca’s had roughly 700 locations open prior to this announcement, so the decision to cut 140 stores will take away about 20% of their overall real estate.
The company has yet to announce which stores will be closed, but it is safe to assume they’ll probably be the 140 stores that have been performing the worst this year.
Francesca’s is expecting to incur charges of around $29 million to $33 million due to these closures.
However, despite having to shut down locations, they are looking at ways to save the company money through lease deferrals, raising additional capital, and other methods.
“However, there can be no assurance that the Company will be able improve its financial position and liquidity, complete a refinancing, raise additional capital or successfully restructure its indebtedness and liabilities,” Francesca’s shared in their filing.
“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.”
We all know the retail business has seriously struggled due to the global pandemic, but it has been especially difficult for retailers who are located in malls.
In fact, Francesca’s announced that their second-quarter sales fell 29% and that a serious decline in mall foot traffic was more than likely to blame.
Though e-commerce has been up for most businesses, with COVID-19 getting worse and worse by the day, foot traffic sales will probably worsen as we finish out the year.