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.
Beyond loungewear, Francesca’s began looking at appealing to a broader demographic. It recently introduced an extended size assortment in recognition that its products appeal to “broader range of body sizes,” Clarke said. The company also launched a new brand, Franki, aimed at tweens between 10 and 14.
“Franki as a brand is about appealing to Francesca’s younger sister,” Clarke said. “We see it as an opportunity to broaden our reach, but also to appeal to a customer who we are going to retain longer and through the company.”
With states back open, Francesca’s boutiques are also open and hiring. In terms of the company’s status right now, it’s in “growth mode,” according to Clarke, who said that pre-pandemic foot traffic hasn’t totally rebounded just yet.
Last month, Francesca’s announced a new hiring strategy with speed interviews at its locations. Interested candidates could apply for a job in the store by scanning a QR code and then opt in for an interview right there on the spot. According to Clarke, the initiative helped fill 197 of the 260 openings.
And on the merchandise side, Francesca’s original customer, who typically came to the boutique for date-night dresses, outfits for work and jewelry and accessories for going out, is starting to reemerge. Post-pandemic shoppers are once again buying personal hygiene products such as teeth whiteners, lipstick and nail polish, signaling consumers want to look and feel their best as pandemic restrictions ease, according to a recent Wall Street Journal report. Francesca’s can welcome its customers back into its store--with a wider selection of products and brands that ensures the brick-and-mortar store is a different experience than before the pandemic began.
As consumers look for new clothes to ease back into the real world, Francesca’s has also found its customers want the company to complete entire looks for them, with accessories to build out an outfit. Adding outfit building has helped repurpose the brand. The company has also taken on a new mission, Clarke explained.
“We recently launched our brand purpose, our why, as ‘Free to be you,’” he said. “That translates into the store experience in terms of building a new service model and culture that’s all about enabling our customer, but also associates, to express their authentic self.”
Furthermore, Francesca’s is looking to connect more deeply within the communities it operates by working with small and local businesses, particularly those that are women- and minority-owned. While Clarke couldn’t divulge specifics, he hinted that Francesca’s is working on strategic partnerships to identify opportunities through a “Shark Tank-like initiative” aimed at supporting small businesses. To back it up, Francesca’s hired a new senior vice president of boutiques, real estate and strategic partnerships at the start of 2021.
“We are often considered the local boutique that happens to be a national chain,” Clarke said. “[We see] an opportunity to be more present in the communities in which we serve.”
With all the changes the company has undergone, there’s only up to go.
“The last 15 months have been very challenging,” Clarke told Retail Leader. “I’m very grateful for the support of associates, landlords, vendors and the broader retail community. I'm really optimistic for the future. Under new ownership, we have a reason to exist."