Francesca's Holdings Corp. engages in the operation of a nationwide-chain of boutiques, through its subsidiaries. It offers assorted apparel, jewelry, accessories, and gifts. The company was founded in 1999 and is headquartered in Houston, TX.
Net sales decreased 6% to $106.0 million in the thirteen weeks ended August 3, 2019 from $113.0 million in the thirteen weeks ended August 4, 2018. This decrease was primarily due to a 5% decrease in comparable sales following a 13% decrease in the same period of the prior year. The decrease in comparable sales was the result of lower average unit retail prices associated with deeper markdowns. This was partially offset by higher boutique conversion rates and higher average units per transaction. There were 704 comparable boutiques and 14 non-comparable boutiques open at August 3, 2019 compared to 663 and 79, respectively, at August 4, 2018.
Cost of goods sold and occupancy costs decreased 5% to $65.5 million in the thirteen weeks ended August 3, 2019 from $68.9 million in the thirteen weeks ended August 4, 2018. Cost of merchandise and shipping expenses decreased by $2.3 million primarily due to decreased sales volume during the quarter. Occupancy costs decreased by $1.1 million due to lower depreciation associated with boutiques impaired in fiscal year 2018 and lower demolition costs associated with boutique remodels.
As a percentage of net sales, cost of goods sold and occupancy costs increased to 61.8% in the thirteen weeks ended August 3, 2019 from 61.0% in the thirteen weeks ended August 4, 2018, an unfavorable variance of 80 basis points. This change was due to lower merchandise margins and deleveraging of occupancy costs as a result of lower sales. The decrease in merchandise margins was due to deeper markdowns but was partially offset by lower marked-out-of-stock charges.