In the Past Year, Francesca’s Faced COVID, a Bankruptcy and New Ownership — Here’s How Its Business Is Faring Now
Calling the past year unprecedented is no understatement for Francesca’s.
In the span of 12 months, the specialty retailer saw the appointment of a new CEO — just days before the onset of the COVID-19 pandemic, which forced a seven-week shutdown of its brick-and-mortar fleet — as well as a bankruptcy filing, new ownership and ultimately the permanent closures of hundreds of stores across the country.
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But as CEO Andrew Clarke put it, “if 2020 was a fight of survival, 2021 is a year of construction.”
Today, the business is operating under TerraMar Capital LLC and Tiger Capital LLC. While the deal promised to preserve at least 275 boutiques, Francesca’s has managed to keep operating 460. It has also continued to reopen locations as it doubles down on e-commerce, and just two weeks ago, it launched a national hiring initiative to fill more than 200 vacant roles at its outposts. What’s more, the company recently hired a new SVP of boutiques, real estate and strategic partnerships, Chris Kaighn, to chart the path for its stores in retail’s new normal.
Here, FN talks to Clarke about how the company is emerging from a health crisis and the Chapter 11 process — and why brick and mortar is more crucial than ever to the future of Francesca’s business.
On his appointment as CEO:
“I was 10 days in my role as a first-time CEO of a public company when we had to start closing our boutiques as part of pandemic protocols. I joined Francesca’s very deliberately because I was excited about the turnaround of this brand. But 10 days in, it wasn’t a turnaround anymore; it was a fight for survival. The first few months were pretty challenging, but what I would take away from that is I didn’t have to go through the ‘first 100 days’ — [the timeframe] for a new CEO to come in and figure out what to do. Given the circumstances, we had to pivot and try some new things and iterate very quickly that we had to get the business tracking in a different direction because our future was not assured.”
On balancing e-commerce with brick and mortar:
“Overnight, we became a DTC business with more than 700 boutiques closing. In the process, that changed something in the company’s mindset, and our omnichannel business was born … We saw an incredible surge online that we weren’t really prepared for. We were having to build the plane while we were flying it, so to speak, in the sense that the logistics and infrastructure that supported our business were not ready for the kind of traffic volume that we saw. But we pulled out the stops and managed to serve the customer no matter what. We’re building our omnichannel capabilities, but physical retail matters to us and will continue to be important.”
On recalibrating merchandise amid a pandemic:
“[We went] on an innovation spree. Last year, while we were in lockdown, the get-up-and-go-out girl who came to us for dresses was curling up and staying home. We needed to pivot the assortment to cater to those new demands. Francesca’s launched a loungewear line in six weeks, from idea to market. It was supposed to be a trial for the back-to-school period but ended up being a sellout in three weeks. We were able to scale that idea, and we took the assortment a lot more casual last year. We got ourselves into new accessories and gifting areas that were Zoom-friendly. We launched extended sizes, so we fit more body shapes now than we did during the pandemic. The other thing was, in the space of just over 100 days, a new brand was born: Franki — the younger sister of Francesca. It was intended to be an online-only and limited-boutique launch, but as of today it’s in 300 stores.”
On why filing for bankruptcy was the right move:
“If we look back now to when nothing was certain, a Chapter 11 reorganization gave us the opportunity to rightsize our business in a way that set us up to be very profitable for the future and the long term so that we could guarantee jobs and continue to serve customers. If I don’t sound like I’m blowing the trumpet, it’s because we’re very humble internally about how things could’ve ended up very differently given what the retail industry has faced. A number of businesses didn’t see the beginning of 2021. We’re just so fortunately to have found that ownership and strategy to reengage the customer and position ourselves for 2021 — a year of construction and growth.”
On the company’s newfound purpose:
“The last 15 months have been about finding out the ‘why’ behind our business and putting the customer at the heart of every decision we make. Our brand is evolving externally, but culturally — internally — we have a new brand purpose: Free to Be You, which is about adopting a much more flexible and authentic approach to retail in the way that we serve our customers and in the way that our associates show up every day. [We] recognize that it’s about responding to a very dynamic customer mindset.”
On lessons learned in the past year:
“We recognized Francesca’s at its heart was a localized boutique that happened to be a national chain. Nonetheless, that boutique and treasure-hunt experience resonated online. Like many retailers, we saw our online business surge throughout 2020, and it continues to grow … We have a relatively small footprint, but we have been able to see our boutique business come back really quite well, and it’s on the shoulders of physical retail that we are continuing to build our omnichannel ambitions. We’ve still got a lot of work to do. This is by no means a victory lap.”
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