Francesca’s files for bankruptcy with Covid toll rising

Bloomberg

Boutique women’s clothing chain Francesca’s Holdings Corp filed for bankruptcy after the pandemic eroded the company’s already flagging sales.
The Houston-based company sought Chapter 11 protection in US Bankruptcy Court in Delaware with plans to sell the business, according to a statement. TerraMar Capital LLC or an affiliate has agreed to become the stalking-horse bidder in a court-supervised auction, and Francesca’s existing lender, Tiger Finance LLC, has committed to provide a $25 million bankruptcy loan, the retailer said.
“Implementing this process allows Francesca’s to address our lease obligations and seek a new investor that can see Francesca’s into the future,” Andrew Clarke, chief executive officer, said in the statement. Other potential bidders are studying the company, the chain added, with a target of January 20 for completing a sale.
Francesca’s markets itself as a destination for ever-changing fashion. It replenishes its merchandise daily, with the capacity to ship more than 100,000 units each day. About half of the company’s 1,500-square-foot boutiques are in malls.
The chain joins a growing list of more than three dozen clothing retailers seeking to reorganise amid the pandemic. Francesca’s temporarily shut down in March and began reopening in April, leading to a 50% drop in first-quarter net sales that raised doubt about its ability to survive. Bloomberg reported Francesca’s pending court filing.
But Francesca’s was already struggling well before the pandemic hit. The previous management reported two years of losses and scrapped a strategic review last year after top executives departed.
Clarke, who took over as CEO early this year, previously headed the Loft chain of Ascena Retail Group Inc, which has also filed for bankruptcy. He inherited a turnaround program begun last year that aimed to cut costs, boost online sales and refocus on its 18-to-35-year-old customers, according to court filings. In a sign of how far behind Francesca’s had fallen, the company launched its first mobile app only last month.