For those retailers who were already facing struggles, such as clothing company Francesca’s--which reported two years of losses prior to the pandemic--2020 represented a huge opportunity for change. And that’s just what the Houston-based Francesca’s did.
After filing for bankruptcy at the end of 2020 and getting acquired early this year, the women’s boutique business is still evolving and implementing changes influenced by the experiences of the last 15 months. As the U.S. emerges from the COVID-19 pandemic, Francesca’s has become a story about adapting to the numerous headwinds, with a new owner and a CEO who took the helm just 10 days before the country went into lockdown in 2020.
Retail Leader caught up with Francesca's CEO Andrew Clarke to discuss the company’s recent overhaul, including its bankruptcy acquisition and new brand initiatives.
Clarke is a seasoned retail veteran, with 25 years of experience and a number of high-profile retailer names under his belt, including KMart, Loft and Justice. The CEO, who admits he has a “taste for turnarounds,” was ready to bring new innovations to Francesca’s when he took the role in early 2020, but even he couldn’t have predicted the enormous disruption about to hit.
“I joined the business on March 10, 2020. Ten days later we closed,” Clarke told Retail Leader. “Overnight at the end of March 2020, we became a DTC business whether we were ready for it or not. … And for us, it was a little bit like flying the plane and building it at the same time, in that we were not really prepared for the kind of volume increases we saw through the e-commerce channel.”
The pandemic pummeled the retail industry--and Francesca’s ongoing turnaround plans. By December 2020, Francesca’s filed for Chapter 11 bankruptcy after reporting a 17% drop in net sales by the end of the third quarter, according to court records. There were plans to close 140 boutiques. Francesca’s was sold to an affiliate of private equity groups TerraMar Capital, Tiger Capital Group and SB360 Capital Group, with the sale closing February 2021.
“We’re very fortunate to have survived the pandemic, albeit not without some considerable reorganization in our company,” Clarke said. “In 2020 we faced the biggest challenges that we've ever faced in our history as a company.”
However, it’s not all doom and gloom for the retailer. Its new owner promised to keep at least 275 boutiques open. Today, there are 460 boutiques open--down from the 558 at the time of the bankruptcy sale. Plus, the business has been able to shift a lot of success to its omnichannel presence, while also reopening its physical stores.
“Fast forward four months, and today we have 460 boutiques open,” Clarke said. “What's great about our new ownership is that [they’re] retaining the physical retail and recognizing Francesca’s as a brand is really important as a physical footprint, a physical presence and experience. Having physical stores matters for us, and it's on the shoulders of those stores performing more than acceptably that we intend to accelerate our omnichannel ambitions.”
Despite going through a bankruptcy sale, Francesca’s was able to maneuver during the pandemic and work through new models to come out the other side. On the product side, there were numerous changes designed to meet the evolving customer demands. With consumers staying at home more, there was a huge shift in what Francesca’s customers were looking for during the pandemic.
“Prior to the pandemic, [our customer] was a dress-up-and-go-out kind of girl,” Clarke explained. “We have a very big dress and accessories business. And clearly that changed dramatically during 2020.”
Instead of dresses, consumers flocked to loungewear that was comfortable to wear while working from home. This prompted Francesca’s to venture into the category for the first time. Additionally, the retailer pivoted its accessories approach to making masks and other pandemic-related products.
With so many changes happening at Francesca’s, the company was able to implement even more to speed up its timeline from new ideas to launching and testing new products in stores and online. The loungewear collection was able to get off the ground in six weeks, according to Clarke, who credits the Francesca’s team for creating a new “Fran speed” to react to customer demands much quicker. Fran speed refers to the time it takes to identify an opportunity, observe how it resonates with customers, test it and potentially scale it.